Discussions
MoU between BRICS and SADC Competition Authorities
JB Cronjé, tralac Researcher, comments on recent developments in the area of cooperation on competition matters within SADC and the BRICS
At the end of 2015, the South African and Namibian Competition Authorities signed a Memorandum of Understanding (MoU) to formalise bilateral cooperation on competition law enforcement and policy. This was recently followed by the signing of two additional MoUs between South Africa’s Competition Authority and its BRIC (Brazil, Russia, India and China) counterparts, on the one hand, and a MoU between several Competition Authorities of the Southern African Development Community (SADC) on the other.
The MoU between the BRICS countries aims to strengthen closer cooperation on competition issues through activities such as the sharing of best practices, joint capacity building events, joint research, and coordination and cooperation in investigations or enforcement proceedings. This MoU entered into force on 19 May 2016 and will remain valid for a period of four years, with the option to renew or extend it further.
A few days later, the MoU between Competition Authorities in SADC was signed to establish a framework for cooperation between the respective Authorities in order to enhance effective enforcement of national competition laws. This framework of cooperation between nine Competition Authorities (Botswana, Malawi, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania and Zambia) in the region came into effect on 26 May 2016 and will remain in force for three years, with the option to renew or extend it further.
In a globalised world where markets transcend national borders, the application of competition laws is usually limited to national legal jurisdictions. This creates challenges due to differences in procedures and substances, overlap and gaps in jurisdiction, lack of coherence, and conflicts. Cooperation and convergence can solve some of these problems (Fox, 2015). Increasingly, competition-related provisions are included in Free Trade Agreements (FTAs) for various economic reasons including the promotion of economic efficiency and consumer welfare; to support the barrier-reducing objectives of economic integration and to preserve the gains of trade liberalisation; to prevent the selective enforcement of competition laws for strategic (protectionist) purposes; and to abolish trade remedies. Competition-related provisions in FTAs can cover a range of issues from obligations to promote competition; adopt or maintain competition laws; regulate designated monopolies, state owned enterprises, and enterprises entrusted with special or exclusive rights; regulate state aid and subsidies; lay down competition-specific exemptions; abolish trade defences (safeguard, anti-dumping and countervailing instruments); or set forth competition enforcement principles; cooperation and coordination mechanisms; and principles governing the settlement of competition-related disputes (Laprévote and Can, 2015).
Cooperation on competition policy issues is protected in Article 40 of the Southern African Customs Union (SACU) and provides Members (South Africa, Botswana, Lesotho, Namibia and Swaziland) “shall co-operate with each other with respect to the enforcement of competition laws and regulations”. The SACU Agreement also provides each Member must adopt a competition policy.
In the case of SADC, Article 25 of the Protocol on Trade obliges Members to “implement measures within the Community that prohibit unfair business practices and promote competition”. Equally, the SADC Protocol on Trade in Services (not in force) recognises the importance of cooperation on issues concerning competition law enforcement such as notification, consultation and exchange of information. It obliges Member States to “notify any other State Party of competition enforcement activities that may affect important interests of such State Party or State Parties, and it shall accord State Parties sympathetic consideration and afford adequate opportunity for any matter affecting the operation of this Protocol”(Article 19(4)). In the case of matters concerning anticompetitive business practices and monopolies and exclusive service suppliers, the Protocol provides “State Parties shall enhance such cooperation, inter alia, in accordance with mechanisms and initiatives arrived at under other SADC Protocols” (Articles 12(3) and 19(5)).
The conclusion of the SADC MoU comes against this background and an earlier decision by the Members to strengthen regional cooperation on competition issues. In 2009, the Members adopted the SADC Declaration on Regional Cooperation in Competition and Consumer Policies and mandated the establishment of a system for effective cooperation among the Competition Authorities of Member States. It provides for the creation of a transparent framework with appropriate safeguards to protect confidential information. It also requires Members to consider the principle of comity and pursue case specific cooperation in preventing hard-core cartels, abuse of dominance, anticompetitive mergers and unilateral conduct. This provided the framework and mandate for Competition Authorities within to negotiate and conclude the MoU. To this effect, the MoU describes the extent of cooperation and provides, inter alia, for the exchange of information and its confidentiality, cooperation and coordination in merger investigations and complaints, harmonisation (as far as possible) of rules and procedures for filing of mergers and applying for leniency or immunity; and the settlement of inter-agency disputes. It also establishes an inter-agency working committee to manage and facilitate cooperation in respect of the matters covered by the MoU.
Sources:
Fox, Eleanor M. Antitrust Without Borders: From Roots to Codes to Networks. E15Initiative. Geneva: International Centre for Trade and Sustainable Development (ICTSD) and World Economic Forum, 2015. www.e15initiative.org
Laprévote, François-Charles, Sven Frisch, and Burcu Can. Competition Policy within the Context of Free Trade Agreements. E15Initiative. Geneva: International Centre for Trade and Sustainable Development (ICTSD) and World Economic Forum, 2015. www.e15initiative.org