In the utopian world of economists, according to Professor Jean-Jacque Laffont:

‘Competition is an unambiguously good thing. This ideal world assumes large number of participants in all markets, no public goods, no information asymmetries, no natural monopolies,… and a benevolent court system to enforce contracts, and a benevolent government providing lump sum transfers to achieve any desirable redistribution…’[1] (The emphases are mine).

However, in his concluding statements, Laffont poignantly quipped and rightly so that:

‘…because developing countries are so far from this ideal world, it is not always the case that competition should be encouraged in these countries.’[2]

This paper posits that Laffont’s diagnosis is not necessarily applicable in a large number of developing economies such as Chile, China, India, Mexico, Republic of Korea and Taiwan Province of China. A second shortcoming of Laffont’s analysis is that it is too narrow and static to be applied to dynamic developments in these newly industrialising economies. This paper however concludes that the competition laws in developing countries cannot be framed in similar manner to the laws in such advanced as the United States and the United Kingdom. Rather, developing countries must look inward to establish for themselves competition laws that truly address domestic problems and do not leave excessive foreign competition unchecked. In the absence of the foregoing, competition law and policy, though an unambiguously good thing, can become a pitfall for many unwary developing countries.

What is Competition?

Competition is an evasive term which defies universal definition, and its understanding differs depending on the context of usage. In defining competition and competition law (antitrust), the use of the language of economics is almost inevitable. According to Dale Wayne in his paper, Issues in Competition Law and Policy:

‘It has become commonplace to use the language of economics in defining antitrust. Courts and scholars articulate economic goals for antitrust policy and use economic methodologies, both theoretical and empirical, in resolution of antitrust issues.’[3]

Further toeing similar path of logic was the Supreme Court of India in the celebrated case of TELCO v. Registrar of Restrictive Trade Agreements.[4] The Apex Court observed that the question of competition cannot be considered in vacuum or in a doctrinaire spirit. The concept of competition is to be understood in a commercial sense. According to the Black’s Law Dictionary, competition is the struggle for commercial advantage; effort or action of two or more commercial interests to obtain same business from third parties.[5]

Competition puts producers or manufacturers under constant pressure to offer the best possible range of goods and the provisions of services at the best possible prices, because if they do not, consumers have the choice to shift to interchangeable or substitutable goods.

Although there is no comprehensive competition law in Nigeria today, the issue of competition and anti-competitive behaviour has attracted a lot of attention for over one decade. The Federal Competition and Consumer Protection bill, which would repeal the Consumer protection Act and establish The Federal Competition and Protection Commission and the Competition and Consumer Protection Tribunal was harmonised and passed late November, 2017 by both houses of the National Assembly and will become law upon receipt of presidential assent. When passed, implementation of the law will ensure fair, efficient and competitive markets in the Nigerian economy as well as facilitate access to safe goods, secure consumer welfare and promote efficiency.

The challenge for Nigeria until now was the absence of a comprehensive competition law.[1] Dimgba in his paper made a case for a uniform competition law as sine qua non to economic reforms/liberalisation. According to him, the legal gap exploited in key product markets such as cement, petroleum products (refineries privatisation saga), pay-television, telecommunications, aviation and others (bread, sachet water, sugar, fertilisers etc.) can only be filled by a comprehensive competition law.

The first draft of competition bill was done by ECU Associates in March, 2003 following the El-Rufai Declaration of December, 2002.[2] The draft was a pretty good document but for the merger provisions. This draft was followed by the Federal Ministry of Justice’s draft bill under the regime of Chief Bayo Ojo in early 2005. The draft bill was variously criticised for its overbearing political control and anachronistic merger provisions. Following the adoption of the draft bill by the FEC on 24 August, 2005 and its subsequent rejection by the Senate in September 2006, the bill was tabled for a redraft by Dr Dimgba’s team and BPE. The redraft gave birth to the Federal Competition and Consumer Protection Bill and the National Competition and Consumer Protection Policy.

Overview of the Bill

The bill applies to all businesses and all commercial activities within, or having effect within Nigeria and extends to undertakings in which the Federal, State or Local Government or any of their agencies have a controlling stake.

Section 3 of the Bill establishes a Federal Competition and Consumer Protection Commission (“the Commission”) to administer the Act. Section 3(2) of the Bill provides that the Commission shall be independent in the exercise of its functions, powers, duties and responsibilities as conferred upon it under the provisions of this Act. This feature of independence must be made sacrosanct and reiterated at every chance by the Commission. The government must ensure to equally desist from indiscriminate interference with the activities of the commission.

The Bill in Section 39 establishes The Competition and Consumer Protection Tribunal (“The Tribunal”) to handle issues and disputes arising from the operations of the Act. Pursuant to Section 40 of the Bill, the Tribunal shall consist of a Chairman who shall be a legal practitioner with ten years post call and cognate experience in the field of competition, consumer protection and commercial and industrial law and six other members with not less than twelve years professional experience in no other fields except those listed in the Act. Both the Chairman and other members of the Tribunal shall be appointed by the President on the recommendation of the Minister subject to confirmation by the Senate.

The Bill prohibits agreements made to restrain competition such as agreements for price fixing, price rigging, collusive tendering etc. (with specific exemptions for collective bargaining agreements, employments, etc.)  The Bill repeals the provisions of the Investment and Securities Act relating to mergers (effectively stripping the Securities and Exchanging Commission of its power to approve mergers) and places the responsibility of approving merger transactions on the Competition Commission.

If also passed into Law, the Competition Commission would be entitled to receive a percentage of all the fees chargeable by other regulators for license applications, processing and issuance. The Bill empowers Nigeria’s President to regulate the prices of certain goods and services on the recommendation of the Competition Commission.

The Bill further prescribes very stringent fines for non-compliance. A general fine imposed by this Bill for offences committed by companies is an amount up to 10% of the Company’s annual turnover in the preceding business year. There are also indications that the updated version of the Bill imposes a tax of 0.5% of after-tax profits on all companies in Nigeria, payable to the Competition Commission.

 

Conclusion

Unlike India, Nigeria does not produce most of what she consumes, neither does she consume most of what she produces. It is important therefore that a truly local competition law be fashioned out to promote local competition as well as protect local producers from foreign competition and local producers who abuse their market dominance.

The passage of the law is a laudable effort by the Nigerian legislature and surely a step in the right direction. It is nonetheless worthy of note that a major challenge in Nigeria has been the absence of effective enforcement of possibly good laws. If the Federal Competition and Protection Commission can however be insulated from political interference, it will be able to achieve its set objectives of facilitating fair, efficient and competitive markets in the Nigerian economy.

[1] Dr Nnamdi Dimgba, Is there a Need for Competition Law in the Interest of Nigerian Consumers? (2014) G.O Sodipo Memorial Lecture

[2] Ibid.

[1] Laffont J. ‘Competition, Information and development,’ (1999) Annual World Bank Conference on Development Economics, World Bank, Washington p8; Quoted in Ajit and Singh and Rahul Dhumale T.R.A.D.E Working Papers, No.7, South Centre, November 1999.

[2] Ibid.

[3] Dale Collins Wayne, ‘Issues in Competition Law and Policy’ (2008) 1 ABA Section of Antitrust Law 1

[4] (1977)2 SCC 55.

[5] Black’s Law Dictionary, Ninth Edition, 2004, pg. 322, 323

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