Companies to be fined for non-compliance with Comesa law

The Common Market for Eastern and Southern Africa (Comesa) Competition Commission says companies that do not comply with Comesa Competition law risk a fine of up to 10 percent of annual turnover in the common market and damage to their reputation rising from lengthy investigations or subsequent litigation from customers, competitors and consumers.

In a statement released on Saturday the commission, called upon companies to be aware of the provisions of the Comesa competition law to meet their obligations and protect their positions in the market place.

Reads the statement: Cognisant of the severe consequences of non-compliance with the competition law, businesses should regularly review or inquire whether their business practices and agreement comply with Comesa competition law.

It is important, therefore, to promote an understanding amongst employees as to what type of behaviour is and is not permissible under the law.”

According to the statement, to reduce the risk of being non-compliant, companies need to devise and actively implement a competition compliance policy that is specifically tailored to them.

“Not only does this minimise the risk of being non-compliant, but if a company is investigated for anti- competitive behaviour, evidence of a competition compliance policy may be taken into account by the commission in determining the penalty,” it reads.

Vincent Nkhoma, the commission’s competition’s enforcement and exemptions manager said the law is crucial in enabling the common market attain the full benefits of the regional economic integration agenda by affording a legal platform for promoting fair competition among businesses in the region.

Nkhoma said the law protects consumers from adverse effects of monopolisation and related business malpractices.

He said anti- competitive business practices harm consumers’ welfare and derail the gains of intra regional trade.

Nkhoma added that when firms engage in fierce competition, innovations are introduced aimed at outwitting each other on the market, benefiting the consumer at the end with low prices and high quality services.

“Now imagine these two companies agree on a cartel where rather than compete, seek to collude to exploit high prices from the market; the companies will end up maximising profits at the expense of consumers who lose out by way of poor quality products and high prices,” said Nkhoma.

He further said dominant firms in the market that operate without competitors charge excessive prices knowing that consumers have no alternative of getting similar goods or services anywhere feasible.

“They may also price below cost for a short period with the view of driving competitors out of the market and then reverting to excessive prices to recoup the temporary losses once the competitors have been driven out of the market,” Nkhoma said.

He said the commission, therefore, monitors market concentration and anti-competitive conduct, which are potenctial breeding grounds for market monopolisation.

Nkhoma said competition law prohibits a wide range of horizontal and vertical agreements, including cartel and abuses of a dominant position that have the effect of preventing and distorting competition in the common market.

The commission, which is headquartered in Lilongwe, was introduced on January 14 last year with the aim of promoting consumer welfare through encouraging competition among businesses by instituting a legal framework that prevents restrictive business practices and other restrictions that deter the operation of the market.