30 October 2011

African Alert

New competition and consumer protection regime in Kenya

As of 1 August 2011, the Restrictive Trade Practices Monopolies and Price Control Act of Kenya was repealed by the Kenyan Competition Act (New Act).

The New Act encapsulates both competition laws and provisions dealing with consumer rights, and creates a new watchdog, the Competition Authority of Kenya (Authority). The Authority is structured as an independent authority to deal with competition and consumer protection matters. Notably, the previous authority, the Monopolies and Price Commission of Kenya, was not an autonomous entity but rather a division within a department. This dependency reportedly reduced the effectiveness and success of the previous Act.

The New Act also introduces revised penalties for contraventions with fines of up to 10 million Kenyan Shillings (KS) and/or imprisonment of up to five years. Offences under the Act include engaging in restrictive trade practices or conduct which amounts to an abuse of a dominant position or offensive behaviour pertaining to mergers including implementing a merger without the requisite prior approval or failing to implement a merger in accordance with conditions attached to the approval. The Authority is also empowered to conduct sector enquiries to determine whether an economic sector contains an "unwarranted concentration of economic power", in which case available remedies include a disposal of interests.

At a consumer level, the Authority is tasked with receiving and investigating complaints from consumers and promoting public knowledge and awareness of its role. It will also promote the creation and recognition of consumer bodies to represent consumers appearing before it. Contraventions of the provisions of the New Act dealing with consumer rights may also attract fines of up to KS10 million and/or imprisonment of up to five years. Under the New Act, offences include: providing false or misleading representations regarding the goods or services being supplied; supplying goods or services that do not comply with prescribed consumer product and safety standards; or in connection with the supply of goods or services, engaging in conduct that is in all the circumstances unconscionable.

New merger notification thresholds to be introduced in Zambia

Zambian competition law requires mergers to be notified if they meet a certain threshold, which threshold is to be prescribed by the Minister. Since the inception of the Zambian Competition and Consumer Protection Act in October 2010, the Minister has not yet determined the threshold for notifiable mergers, with the result that all mergers within Zambia are currently notifiable. In addition, a merger notification fee of 0.1% of the greater of the combined assets or turnover of the merging parties in Zambia is required to be paid.

The Zambian Competition and Consumer Protection Commission (CCPC) recently confirmed that new regulations dealing with merger notification thresholds have been signed but have not yet been published in the government gazette. The CCPC has reported, that in terms of the new regulations a merger transaction will require authorisation from the CCPC where the combined turnover or assets, whichever is higher, in Zambia of the merging parties, is at least 50s million fee units in the merging parties' latest full business year. One fee unit is likely to amount to 180.00 Zambian Kwacha (ZMK), bringing the threshold for a notifiable merger to ZMK9 billion (calculated as ZMK180.00 x 50 million units). It bears mentioning that, by South African standards, this threshold of less than R15 million, remains low.

Under the new regulations, the merger notification fee will remain 0.1% of the greater of the combined assets or turnover of the merging parties in Zambia, but the notification fee will now be subject to a cap of ZMK3 billion (at the time of publication ZMK3 billion amounted to approximately US$600,000). For high turnover industries, merger notification in Zambia remains an expensive undertaking when compared with South Africa's maximum filing fee of R350,000 for large mergers.

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