Wednesday, June 29, 2022

Competition Authority amends merger control turnover thresholds

Only three years after its birth, the Competition Act is expected to go under the knife to give way for the amendment of the merger control threshold. Currently a proposed merger is subject to control if the combined annual turnover in Botswana of the merging enterprises exceeds P10 million, as well as when combined assets in Botswana of the merging enterprise exceeds the same amount.

To that end, the Competition Authority is expected to submit a recommendation to the minister responsible for Trade and Industry for a possible upgrade of the threshold. The Director of Competition and Research Analysis at the Competition Authority (CA) Botswana, Dr Mokubung Mokubung confirmed the pending development to Sunday Standard this week. He however could not commit to a specific figure which he said would be decided upon approval of the amendment by cabinet.

The Competition Authority is the primary enforcement agency for competition law and policy. It was established under the Competition Act of 2009 to monitor, control and prohibit anti-competitive trade or business practices in the economy of Botswana. The need to amend the competition law is said to have been triggered by a huge number of merger and acquisitions notifications submitted to the authority since its inception. Among the laws that have been proposed for possible inclusion in the Competition Act is the one that governs franchise business.

Over the years, the franchise business in Botswana remained impervious and has registered a steady growth in light of heavy demand. However the success and growth of the franchise industry in the country is said to be controlled by a few businessmen, mostly foreigners, who allegedly block locals who are interested in that line of business. According to trade and competition specialists at the Competition Authority (CA) and the Botswana Institute of Development Policy Analysis (BDIPA), it is evident that aspiring local entrepreneurs have been sidelined by the unnamed individuals who hold rights to franchise licenses of some the leading and international fast food retail shops.

The ill-fated situation is however not helped by government’s failure, over the years, to draft and implement a policy or law that guides the franchise business in the country. BDIPA’s Professor Roman Grynberg says a healthy legal environment is of great importance for the franchising business in the country. He said such an environment should include provisions pertaining to all areas that fall within the ambit of franchising.

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