The way Botswana does business will never be the same again ÔÇô thanks to the advent of the Competition Authority
Thula Kaira has a simple explanation for regulating competition in the marketplace. Companies, he states, are artificial persons and they are run by real people who are prone to be greedy, manipulative, collude, bullying and a spirit of dominance to kill competition.
“It’s the reality of life and markets,” says the chief executive of the Competition Authority of Botswana. “There should be an institution to deal with such predatory and scavenging behaviour to ensure that opportunities do not benefit just a few players.”
Expect to hear a lot from, and about, this man over the next couple of years as he goes about reshaping the way Botswana does business.
Kaira, a Zambian national, has been given the task to set up a corporate body that is bound to rewrite the rules of business in this country ÔÇô hopefully for the better. And it’s been action since he arrived a few months back ÔÇô from securing office accommodation, employing staff, to meetings, meetings, meetings and more meetings (with the political leadership, business community representatives, councils, as well as fellow oversight institutions such Directorate on Corruption and Economic Crime (DCEC) and Public Procurement and Asset Disposal Board (PPADB). A Memorandum of Understanding with DCEC and PPADB is at drafting stage, and once signed, it would ensure that, where possible, the organisations bring together their different competencies in public interest.
The Competition Authority was established under the Competition Act of 2009 to implement the national competition policy as translated into Act. Under the Act, the Authority is responsible for the prevention of, and redress for, anti-competitive practices in the economy, and the removal of constraints to free play in the market. The law prohibits horizontal and vertical agreements between companies that have the effect of preventing or lessening competition in the market for any goods or services in Botswana. Included in this bracket are practices like bid rigging, price fixing, as well as suppliers or producers forcing resellers to sell at a price determined by the supplier. Also prohibited is the abuse of dominant position by one of or more companies in any market to lessen competition. In addition, the Authority is tasked with control of mergers and acquisitions.
Some of the practices that the law prohibits have been so dyed into the local business fabric that we all regard them as, well, pretty normal. Take the different terms and conditions of service that are accorded customers; one customer is asked to pay cash, the other is asked to pay after 30 days, and the third is given 10 percent discount. Kaira argues that such discriminatory treatment by suppliers has the effect of distorting competition among resellers. He concedes that this is a common practice in the market. But, he states, the fact that it is a widespread custom does not make it right.
He talks of the need to level the business playing field to ensure fair and equitable business opportunities. The underlying point is that unless there is fair competition, it is difficult to create and spread wealth.
He says the Authority has already advised government on how to deal with bid rigging.
“We have distinctive competencies to identify and deal with such occurrences, which happen especially in large scale contracts,” he says. “Some of the occurrences and dealing are suspicious [just on the face of it]. The Authority can investigate based on mere suspicion, which is an important power, without waiting for a complaint. But it can’t make a finding of guilt until the due process is carried out to arrive at a legally founded finding.”
The nature of Botswana’s economy makes it susceptible to anti-competitive behaviour. It’s a small economy, yet there are many players ÔÇô and the survival instinct adopted by many is to resort to underhand tactics in their various forms ÔÇô from outright bullying to price fixing. The Competition Authority, therefore, becomes a platform for businesses and consumers to lodge complaints of any anti-competitive behaviour wherever it is detected.
“Once we receive a complaint, that makes us a referee to blow the whistle when a player is offside, or when there is bad tackle,” says Kaira. “We have the power to issue yellow cards, maybe not so much the red cards. We can make an order to remedy the situation, as an impartial arbiter in disputes.”
Now, you might be familiar with the view, especially from big and entrenched business interests, that is disdainful of competition regulation. It is the view that says regulation distorts the market and stunts entrepreneurship. Kaira counters that it is lethal to presume that businesses are run by ethical people or angels. The reality, he says, is that businesses are commandeered by human beings, who are prone to have evil desires ÔÇô either to supply a substandard product, or to kill competition. His argument is that competition regulation ensures that a bad seedling is uprooted before it grows into a tree.
His retort to the opinion that too much regulation is not good, is that you can’t have too many policemen.
“There is no competition that can be left on its own to ensure that the rules of the game and equity are followed. We need to admit that markets are not perfect. Liberalism presupposes that that the market will sort itself out and reach equilibrium,” he says. “This concept has been dispelled over years, especially after the [global] financial crisis.”
If you ask Kaira for an example of the worst case scenario of an economy without competition regulation, he’d invariably mention the United States before enactment of the Sherman Antitrust Act of 1890. It was an economy characterised by big inequalities. The industry owners consisted of some of the wealthiest families that had formed cartels. They had gone to the same schools, belonged to the same clubs, played golf together, and had married into each other’s families. All the government contracts and major businesses went to them. The lesson that Kaira draws from that picture is that where there is no effective and fair control, the economy is susceptible to stagnation. The result is that a country then depends on a few individuals for employment and government revenue. Such individuals then become so powerful that they can hold a country’s economy to ransom.
“The American competition law came very late , but it is a strong law that contributed to making the US economy competitive. Anti-trust is now an important aspect of American business life. We don’t have to reinvent the wheel. We need to learn from those who advanced before us. All the developed and robust economies of the world have competition law [because] it removes barriers, and concentration of economic power in a few individuals that close out other entrepreneurs,” he says.
Being a new creature in the land, there are many misconceptions about the Competition Authority. Kaira is aware of these misreadings.
“It is not our role to control prices, impose business partners, and create business opportunities. It is not our role to dismantle monopolies,” he says. “Some people think we are there to ensure that there are lower prices. In a liberal economy, the market sets the price. The law only gives us a role to play in an instance where there is excessive pricing. We can impose transparency, but we can’t impose an incompetent supplier on a buyer. That would be retrogressive. It is not our role to make business decisions for enterprises. Ours is to ensure that anti-competitive trade practices are redressed.”
If businesses are run by mere mortals with feet of clay, I guess so too are the people at the helm of competition regulatory bodies. Kaira assures that the law incorporates enough checks and balances to guard against abuse of power by the Authority.
“Whatever business law, you should have efficient and effective ways of appeal such that when a regulator made a wrong decision, an appeal should be swift. Our practices must be democratic and transparent in a manner that ensures we don’t abuse our power. Above us is the Competition Commission. Final decisions are made by the Commission. If the Commission had it wrong, the aggrieved party can appeal to the High Court. It is important for us to have guidelines and ethics to ensure that none of us abuse our powers, or are bought. If we are bought, DCEC can investigate us. We are not immune from these organisations,” he says.
His view is that the Authority should be a model for good governance practices.
With 13 years experience in the field, Kaira describes competition regulation as a passion for him. And he has strong views about competition regulation, one of them being that concentration of economic power in a few hands is a model of neo-colonialism, especially if such economic power is exercised by a foreign firm. He knows of instances where those with economic power even determines who becomes a country’s president.
He warns that once a country finds itself dependent for economic survival on one or two foreign firms, then it has lost its independence.
“You need to guard against that by using laws such as Competition Authority, PPADB, citizen entrepreneurial development and other polices to ensure that economic wealth is easily accessible by citizens,” he says. “It is often said you should create an indigenous middle class, and it is created by access to opportunities.”
