Procedural issues and effectiveness of regional competition authorities
In the first quarter of 2017 the COMESA Competition Commission (CCC) assessed its first restrictive business practice complaint. The case relates to the exclusive award of marketing and media rights for the main regional football competitions on the African continent. The allegation is that on 12 June 2015 the Confederation of African Football (CAF) entered into an agreement with Lagardère Sports S.A.S., a sport marketing firm based in Paris, France that awarded the media and marketing rights for the Africa Cup of Nations, African Nations Championship and African Champions League to Lagardère exclusively for the period 2017 to 2028. It is further alleged that CAF entered into a similar agreement with Lagardère Sports S.A.S. from 2009 to 2016 in relation to the media rights of the same tournaments over this period.
The launch of the investigation by the CCC comes at a time when the competition authority in Egypt, a member of COMESA, concluded its investigation into a similar allegation. The Egypt Competition Authority (ECA) found CAF to have violated its act and requested the Prosecutor’s Office to press criminal charges against the former CAF President and Secretary General. At the same time, the Fédération Internationale de Football Association (FIFA) recently awarded media rights to several companies for the Confederations Cup 2017 and World Cup 2018 through a competitive tendering system. Five broadcasters in Sub-Saharan Africa namely; Econet Media, SABC, SuperSport, StarTimes and CANAL+ have been awarded media rights to broadcast the two tournaments.
These developments raise two important concerns. First is the continued use of exclusive agreements in the broadcasting sector on the continent in contrast to more competitive bidding processes elsewhere. Second, and important to this article, is that the conclusion of a case with regional dimensions by the ECA raises questions about jurisdiction and procedural issues on competition concerns that transcend borders in COMESA. The article does not weigh the merits of the case but examines procedural issues that may affect the effectiveness of the regional competition authority in future cases.
CCC jurisdiction on regional competition issues versus that of national competition authorities
Article 23 of the COMESA competition regulations empowers the CCC to investigate mergers that involve companies operating in two or more COMESA member states. Part 3 of the COMESA competition regulations outlines RBPs that can be investigated by the regional authority. Specifically, article 16 states that, ‘the rules on restrictive business practices apply only if the agreement, decision or concerted practice is, or is intended to be, implemented within the Common Market. Furthermore, it considers conduct that may affect trade between Member States; and RBPs which have as their object or effect the prevention, restriction or distortion of competition within the Common Market. Article 22 (1) states that ‘where the Commission has reason to believe that business conduct by an undertaking restrains competition in the Common Market, the Commission will so notify the undertaking involved and will launch an investigation’ which empowers the Commission to institute an investigation. The CCC is empowered in terms of article 16 and 22 to investigate the CAF case since all COMESA members are part of CAF and are therefore affected by the exclusive agreement.
The regulations for RBPs are not as explicit as those for mergers, and seem to create some uncertainty about the circumstances under which the CCC can investigate such cases. The current wording suggests that CCC has the power to investigate any case even at national level as long as the country is a member state and if that matter will have an impact on the common market, even though the Egyptian authority may have investigated aspects affecting its own territory.
The lack of an explicit definition that distinguishes cases with regional effects might have led to the ECA conducting a unilateral investigation on a case that actually has a regional dimension. The jurisdictional uncertainty is further compounded by a lack of COMESA guidelines for investigating such cases, which may explain why the ECA only informed the CCC of its investigation after it had been concluded. The lacuna in the law can potentially create a conflict between national authorities and the regional authority on jurisdiction and can also lead to over-enforcement. For instance, while the ECA has referred the case to the Prosecutor General for prosecution, CCC regulations stipulate that if found guilty the undertakings involved will be liable to a pay a penalty of up to 10% of annual turnover of each undertaking for participating in the infringement. It is important to note that investigations by both the ECA and the CCC of the same conduct partly defeats the purpose of establishing a regional competition authority. Regional competition authorities provide a platform for member states to pool financial resources when undertaking investigations and avoid duplication of resources.1
What is the practice in the EU regional authority?
The European Union Competition Commission is a mature regional competition enforcement agency and therefore it is useful to look to it for comparative purposes. A significant difference between the European law and the CCC Competition Regulations is that the former decentralised the application of its act in 2004, empowering member states to enforce the European Competition Law in parallel with their domestic laws. The process came with many challenges especially around inconsistency when applying the law.2 To counter these challenges, the EU created a robust system of cooperation among competition authorities through the establishment of the European Competition Network.
Mechanisms were developed to facilitate effective cooperation. First a signalling mechanism is in place, in which any authority is required to alert others when it commences investigation or any other action to avoid overlapping activities that have the potential to lead to divergent results. Second, authorities agreed on a division of work mechanism to enable each authority to utilise its relative advantages in investigations. As a general principle, the authority that initiates the investigation remains competent to act until the end of the investigation. Third, a system of information exchange and coordination was developed to invigorate cooperation between authorities in their investigations. A dispute resolution mechanism to solve and prevent potential conflicts was also agreed upon.
Important to note from the EU is that the mechanisms have been created to avoid multiple investigations of the same matter. This is a very important step towards harmonizing competition laws and facilitating regional integration at large. The current CCC case seems to have exposed a weakness in this respect.
- Fox, E. M. (2012). ‘Competition, Development and Regional Integration: In Search of a Competition Law Fit for Developing Countries’ in Law & Economics Research Paper Series Working Paper No. 11-04.
- Cseres, K. (2010). Comparing Laws in the Enforcement of EU and National Competition Laws’. European Journal of legal studies, p.7-44.