NaCC clamps down on unfair business practices

> Timo Shihepo

Windhoek – The Namibian Competition Commission (NaCC) is clamping down on companies that are undermining fair competition by engaging in anti-competitive behaviour in pursuit of profit.

Such organisations engage in restrictive prohibited practices when more than one undertaking, trading in similar goods or services, coordinates their activities.

This leads to what is referred to as cartel activity where competitors fix prices, coordinate production or output or divide markets.

NaCC’s Corporate Communications Officer Dina Gowases told The Southern Times that similarly, companies in vertical relationships, such as wholesale and distributors, are also not allowed to behave in a manner that restricts competition.

“It was because of this that to date, Namibia Competition Commission’s Restrictive Practices Division has handled a number of restrictive (agreements) as well as abuse of dominance cases. The 52 percent of the cases handled are abuse of dominance cases and 48 percent agreements of an anti-competitive nature,” she said.

She said most of the enquiries have been done in the automobile industry, the retail sector and the cement and poultry industries in partnership with the African Competition Forum.

“Malpractices are usually detected by market studies. The Commission has undertaken market studies to understand the dynamics of certain sectors which are considered to have a high level of market concentration.

“However, the enquiries do not necessarily mean that these are sectors which have the most potential anti-competitive conduct. This was informed by the number of competition cases brought to the Commission,” she said.

The NaCC also said that although there are many players in the economy, they are not all equal in terms of size. Some are small (Small Medium Enterprises) and others are big companies. Information also shows that big companies have a certain market share of over 45 percent and are said to be dominant in a particular market and can easily force small companies to exit the market as a result of their conduct.

According to NaCC the abuse of power is when a certain company prices its goods below the cost of producing or supplying such goods.

This is known as predatory pricing. The main aim is to drive competitors out of the market and thereafter increase the price to maximize profits.

There is also what is called margin squeeze. This happens when suppliers, if they are a dominant company can force its suppliers not to deal with its competitors, thereby forcing its competitors out of the market.

Under margin squeeze, a dominant company can also refuse to do business with another company. For instance a dominant supplier can refuse to deal with an SME, although it is economically viable to do so. This is in contravention of the Competition Act 2 of 2003.

There is also what is called excessive pricing whereby with regard to consumers, a dominant company may sell its goods or services at a high price and this reduces consumer welfare.

In order to continue clamping down on this, the Namibia Competition Commission encourages anyone to lodge a complaint with the commission if suspecting or is aware of anti-competitive practices in the market.

“Anyone can also provide information on a confidential basis to the Commission, in accordance with the rules made under Act.”

October 2015
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