The New ERA Promoting fair competition in Namibia

 

The Namibian Competition Commission (NaCC) was established four years ago ‑ six years after the Competition Act was passed in 2003. Its main mandate is to safeguard and promote fair competition across all sectors of Namibia’s economy, having regulatory oversight of over 80 000 business entities. NaCC’s CEO MIHE GAOMAB II was entrusted to lead the Commission. He speaks to ANDREAS THOMAS of The Southern Times about the introduction and progression of competition regime in the country.

Questions (Q): Before we delve deeper into our discussion, has NaCC become more effective since its inception? Do you feel its role is being recognised?

Answer (A): We started in 2009, and I can confidently say that the competition commission has become a prominent institution in the Namibian sphere of economic influence. All businesses that merge with each other have to notify us. In addition, business transactions that you have witnessed like Wal-Mart and Ohorongo Cement have actually gone through the Namibian Competition Commission. In fact, we have already become effective to put in place a merger regime in the country. Our effectiveness is a lot more desired now that we have put in place capacity to enforce the Competition Act, which means we want to penalise the anti-competitive behaviour. It is intensive work, but it has to be done because the law gave us the mandate to enforce the law of the competition commission.

Q: At the beginning, the commission was grappling with shortage of human resources. Do you feel the NaCC now has adequate manpower to successfully carry out its mandate?

A: Actually, I am proud to say that in 2009, there was nothing about competition law, or competition skills in Namibia. Now we got 30 Namibians, not a single expatriate – but Namibians who are carrying the Act and they are doing their work. We have proved that we can actually indigenise, and localise our capacity in Namibia. The competition commission is there to prove that. For now, the manpower is enough. Ours is a specialised field, and you also don’t want to create a big institution with a lot of bureaucracy. The board of commissioners’ vision is to have a lean, small but very effective, and responsible organisation. We are still trying to employ more – 60 is an ideal team.

Q: The NaCC has regulatory oversight over 80 000 business entities. Have you met these businesses to sensitise them about fair trade practices and compliance with competition rules? If so, what was the reaction to the competition law?

A: At first, there was a bit of reluctance on the side of business to be regulated by us. That was understandable, because it was a big change. It was a new way of doing things and business could not understand why they have to come to us. We tried to explain to them that it is important from a regulatory point of view and they took that into account. So, there was a bit of hesitation and reluctance, but when the Wal-Mart challenge came, we took the challenge all the way to the Supreme Court, and won the case – everything just changed for us. The business sector understood that we are here for a reason and they now appreciate that we are not really a regulatory bad thing, but are here to regularise and normalise the conduct in the market place.

Q: The issue of Wal-Mart-Massmart merger is considered as a major victory for the commission so far. What other cases can you point out that NaCC has successfully dealt with?

A: We have the Afrisam-Ohorongo merger case. We stopped that merger because our concern was that of Afrisam going to bed with Ohorongo Cement – it would actually control the market. So, we stopped it, Afrisam left and Ohorongo now is the majority cement producer in the country. We also have the Telecom Namibia-leo/Powercom case whereby we approved the merger on condition that they should operate as independent entities. We informed them that even though government is the sole custodian of Telecom Namibia, the latter and Leo (TN Mobile) should even compete with other players like MTC independently.The latest one we dealt with concerns the medical services – the SOS–EMED which we prohibited, because we cannot create a new monopoly situation. In addition, down at the coast in Walvis Bay, there was the DCD-EBH merger that concerned docking facilities. As you can see, there are three docks under EBH at the harbour, and our commissioners felt that the fourth dock must be independent from EBH.  We wanted to allow for a more level playing field and participation for docking facilities and employment protection at the Walvis Bay port.

Q: It is common practice that regulatory authorities adopt “carrot and stick” policies. Does the NaCC have enough teeth to effectively enforce compliance?

A: Actually, the competition commission got enough teeth and it can bark also. Even though you have teeth to bite, as a regulator that is not just something you can do willy-nilly. First, you must establish your mandate in the market economy. It is not good to penalise or to punish the behavioural conducts, whereas you know there is mechanism to use for you to deter bad behaviours even to the point of not punishing. So in that line, what we have been doing so far as the competition commission, we advocated our name. We made our name very credible, building a level of confidence in the economy. But the important thing that is now going forward is that while we are doing that, we have let people know there is a competition commission – and when you are involved in anti-competitive behaviours, you will be penalised. And some businesses have stopped, but there are still some undisciplined ones. And because of that, now we are at the stage of enforcing our Act – to pursue these businesses.

Q: How does fair competition in the Namibian business market benefit consumers?

A: That is a very good question because people, especially the consumers, always ask, “What is the relevance of the commission?” The thing is, if there is a high level of prices that is out of reach of consumer pockets that is when you see us getting involved. Some businesses are involved in anti-competitive behaviour ‑ like predatory pricing, shutting out smaller players, and monopolising the market – that is actually, where we come in to promote fair competition. We keep the competition space lively and ensure that players that partake in that competition space are doing so in a free and spirited fashion. How relevant are we to the consumer? Well, the point is that if we don’t do this, the prices will skyrocket, consumers won’t have a voice, and they don’t a have choice and even if they go from one shop to the next, prices will still be the same. What some businesses engage in is cartelised behaviours; they form cartels and they collude. And our mandate is to stop those things.

Q: Can you point out some developments at NaCC that you believe bring the competition commission in line with international best practices in terms of dealing with unfair business practices in Namibia?

A: We are a young maturing institution. We needed to understand what others are doing with their competition laws. So, we became a member of International Competition Network, which is a network of hundreds of competition commissions all over the world, with the aim to foster competition culture in the world. That was essential for us because they got cutting edge competition practices that competition authorities are entrusted with, and we’ve learned from that. We are also a member of the African Competition Network, which is affiliated to the International Competition Network. And in December 2012, competition authorities across African came to Namibia to learn about research capacity on selected sectors, which are – cement, poultry and sugar, to try to understand what kind of anti-competitive practices are in there.

Q: The approval of the merger between Wal-Mart and Massmart by Trade and Industry Minister might raise concerns of political influence on the NaCC. Can you explain the relationship between the commission and the ministry with regard to decision-making?

A: The nature of administering the Competition Act got sequential steps, which allow the minister and competition commission to co-exist in terms of enforcing the competition law. For instance, at the commission, we have directorates that are entrusted with work to carry out investigations. When the investigation is done, it will be given to me ‑ as the head of the institution ‑ to clear it in terms of quality assurance. When I clear the investigation, I submit it to our board, which is the adjudication board, to decide on what to do with findings of the investigation. Once the board decides, and the parties involved are not happy with the decision – let’s say there is merger, and the parties are not happy – they get a recourse under the Competition Act to approach the Minister of Trade and Industry.

So, the minister is like the appeal body on the decisions that we have made as the commission. Then, when the minister reviews the decision, and the parties are still not happy then after three months, they are entitled to seek recourse at the High Court to challenge the decision of the minister. And that’s actually how the Wal-Mart case came by, it went to the minister for review, and when the parties were not happy they went to the High Court, still the parties were not happy with the decision, we even went up to the Supreme Court. So, it is about proper administration of the law.

Q: The issue of State-Owned-Enterprises presents a problem with regard to competition law. The argument is that SOEs are established to carry out special responsibilities on behalf of government. But it is argued that some of them are also market participants – competing with the private sector. Why are these dominant public enterprises exempted from the competition law?

A: They are only exempted to an extent authorised by their laws. What I mean by that is in terms of the competition law, we take due considerations that these monopolies or state utilities exist for a particular reason. One of the reasons is that they are providing a public function – a function like water provision or electricity provision. These kinds of functions cannot be readily done by the private sector because of the huge capital outlay. Because of that, the state entities are authorised, by their own laws, to operate a particular function and if those laws do exempt them to a certain level of competitive competition related practice, then they are entitled to carry them out, provided they don’t contravene our Act (Competition Act). Therefore, provided they don’t exercise anti-competitive behaviour – that’s deliberately shutting certain market players out of business, or frustrating that sector deliberately. Because of their nature, the competition commission has memorandums of understanding (MoUs) with sector regulators like Bank of Namibia for the financial industry, Electricity Control Board for electricity, the Communications Regulatory Authority of Namibia for telecommunication and we are pursuing it (MoU) with the Namibian Tourism Board. Those kinds of MoUs entail that we must sit together at the same table to look at how we can govern that particular parastatal to deter anti-competitive practice. There is also a new devolving issue coming up regarding how they (SOEs) must perform, which is called a competitive neutrality function. This means that the public entities operate in such a way that they do not drive out private players. They must not indulge in anti-competitive practice, if they do then it is a concern to us – they are only exempted by law but not from the provision of our Act.

 

Q: There has been a steady increase in adoption of competition laws in Africa, as most international businesses are becoming aware of the investment opportunities on the continent. Can you give us a little bit more perspective as to why it is important for competition regulators in Africa to co-operate with each other?

A: It is crucial that we work together because most of the anti-competitive practices are actually not born inside any economy. Most are cross-border and mainly it’s the multinational companies that perpetuate monopoly ‑ a practice that is not conducive for any economy. Therefore, it is important for African competition authorities to come together. What we can do is that we can even have a uniform merger modification under SACU or SADC ‑ more like what COMESA is doing. We can even have a co-operative investigation on companies that are involved in cross-border anti-competitive practices. It is essential due to some global rules like franchising, which is not really contained in the local economy. It cuts across borders and some franchises allocate markets and frustrate others that want to get into that franchise, so we are happy to corporate on that.

Q: How does the Competition Commission deal with consumer-related issues?

A: The Act gave us enabling spirit to look at consumer issues in the country, in the context of competitive pricing, pricing element and the choice of a wide variety of goods.  But the consumer provision is not present in the Act at the moment. Because of that, the competition commission finds it difficult to approach, and assist the consumer directly. For now, we can only assist the consumer regarding pricing and product choice. Because of that, we have come up with a research study, in terms of consumer protection, and it points that there is a need for consumer provisions.

We are now trying to look at the review of the Competition Act, to put it in a certain provision that will allow us to directly protect the consumers, and those provisions could relate to, as I mentioned, competitive pricing, product choice, misleading advertising and issues of consumer advocacy.

Q: Are you happy with the direction the Commission is going and what specific goals do you wish to accomplish during your time as the head of Namibia Competition Commission?

A: I am very happy with the way the commission is going. Now we have fully constituted five commissioners with the chairperson, Mr Festus Angula ‑ who also happens to be a very seasoned and experienced professional.

I am happy that he brings in that business experience into the commission, and infuses business ethics into the organisation. So, I am very happy. As the head of the institution, I would like to evolve more on three issues for next year, which I call the – new ERA. E stands for enforcement, R – for research, because we just got a new research division. We are helping the ministry of trade and other stakeholders with research on competition; they need to understand the intelligence on competition and of course A – which stands for advocacy.

We need to better educate our public in a non-technical tone, better explain to them what the competition commission does and where it is going. So, that is the new ERA – the priorities for 2014.

November 2013
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