Friday, October 30, 2020

What the Competition Bill proposes

Of all unfinished government business before the recent General Election, the Ministry of Trade and Industry makes a sizeable chunk of the work. Apart from trade issues like the thorny EPA negotiations, the newly appointed minister, Baledzi Gaolathe, inherits key decisions that will pit the country against others in the region.

One of the major tasks that Gaolathe, previously with the Ministry of Finance, has to deal with is the tabling of the Competition Bill under the current sitting of Parliament.

The Bill was formally published in the Government Gazette of October 2 2009 with its memorandum signed by Neo Moroka.

The Competition Bill is a sequel to the Competition Policy that was approved by government in 2005 following an economic mapping survey.

The survey considered factors such as increasing dominance of foreign companies in the economy, the need to promote the growth and development of citizen owned businesses.

“The report emanating from this survey revealed a market dominance in certain sectors of the economy. Since firms in the said sectors enjoy substantial market power, this poses a risk in tendering for public procurement, which may open collusion amongst bidders in their respective markets.”

The Act applies to all economic activity within or having an effect within the country.

The tenets of the Bill are that market dominance and possible creation of market dominance, which could subsequently be abused, was a major consideration of the development of the Competition Policy and the law.

The Bill proposes the establishment of Competition Authority. The latter will be the adjudicating body.

The Competition Authority will be responsible for the prevention of anti competitive practices in the economy and removal of constraints on the free play of competition in the market.
Amongst its activities, the authority will publicise decisions, regulate merging of enterprises, advise minister on international agreements relevant to competition matters and refer matters it has investigated under this Act to the Commission.

On the other hand, the Act proposes that members of the commission must have expertise in commerce, economics, law, consumer affairs or public administration.

Key tenets of the Competition Bill state that an enterprise shall not enter into a horizontal agreement with another to the extent that it directly or indirectly fixes a purchase or selling price or any other trading conditions.

It also wants to guard against practices bid rigging except where the person requesting the bids is informed of the terms of the agreement before the time that the bids or tenders are made.

However, there are instances that the authority might grant exemptions from the prohibition, if those investigated can be reasonably expected that they will offset benefits for the public directly attributable to the agreement.

This will be in the form of maintenance of lower prices, higher quality or greater choice for consumers amongst others.

This will also be in the form of the maintenance and promotion of exports from Botswana or employment in Botswana and an agreement occurring within the context of citizen empowerment initiatives.

The relationship between the authority and commission begins when an investigation has commenced whereby the authority convenes a hearing at which the commission shall hear the views of any person to have relevant interest in the case.

Within one year after an investigation is opened by the authority, the Executive Secretary shall refer the matter to the commission if the authority determines that a prohibited practice has been established.

When the commission determines that a hearing is to be held, it should give reasonable notice of the hearing in writing and four members must be present at the hearing.

If a person fails to attend, fails to produce documents the commission deem relevant amongst others, the person commits an offence and is liable to a fine of P30 000 or to imprisonment for a term not exceeding two years or both.

When the commission determines that an anti competitive breach took place in an enterprise, it may make an order imposing a financial penalty on the enterprise concerned. But the commission shall impose a financial penalty if it is satisfied that the breach of prohibition was committed intentionally or negligently.

The amount of a penalty imposed shall not exceed 10 % of the turnover during the breach of the prohibition up to a maximum of three years.

The financial penalty will be paid into a Consolidated Fund. A person aggrieved by the determination of the commission to the effect that an enterprise has or has not breached prohibitions may appeal to the High Court against the determination.

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