New competition law keeps govt in check
The new competition law has stretched the Competition and Fair Trade Commission’s (CFTC) mandate to control buyer power and protect small suppliers who are not paid after delivering goods.
The Competition and Fair Trade Act of 2024 has included the long- standing issue of delayed payments by government ministries, departments and agencies (MDAs) to suppliers and service providers who are now under the CFTC’s wing.
Speaking in Lilongwe on Thursday, CFTC director of consumer affairs Brenda Botha said this provision was not in the previous law, as such, CFTC could not act despite receiving numerous complaints.
“Buyers could violate the rights of suppliers without being checked, but now with this provision, suppliers can now get redress once they experience any violations,” she said.
Botha cited delayed payments, refusal to accept supplies and changing of terms of the signed contracts and unilateral termination of contract, among others.
According to CFTC, Section 31 prohibits abuse of buyer power, which is described as dominant buyer abusing its powers at the disadvantage of sellers or suppliers and transfer of commercial risks meant for the buyer to the suppliers.
“The commission can issue administrative orders against abuse of buyer power,” reads a presentation by the CFTC.
The new law provides stiffer fines that include 10 percent of the annual turnover for firms and five percent for individuals.
However, the offences are no longer criminal in nature, leading to removal of custodial punishment.
Other remedies include cease and desist orders, product recall order and termination of contracts.
National Association for Small and Medium Enterprises national coordinator William Mwale said in an interview on Thursday that delayed payment by MDAs and big corporations is a serious issue affecting SMEs operations.
“It’s a long-standing issue that has been discussed even at Common Market for Eastern and Southern Africa and Southern African Development Community fora to ensure governments pay SMEs on time,” he said.
Mwale said countries such as Kenya have policies that ensure that SMEs are paid within 30 days, something they have lobbied for a long time to be adopted.
Ministry of Trade and Industry director of SMEs and cooperatives Limbikani Kachiwaya acknowledged that SMEs suffer delays in payment, but said this is being addressed through the new SMEs Bill.
He said the proposed law seeks to transfer to the buyer the costs incurred in the delayed payments.
The Competition and Fair Trade Act 2024 came into effect on July 1, replacing the Competition and Fair Trade Act of 1998.
