a tripartite report - Unctad

114 VOLUNTARY PEER REVIEW OF CLP: A TRIPARTITE REPORT ON THE UNITED REPUBLIC OF TANZANIA – ZAMBIA – ZIMBABWE
The Act however recognizes that some other horizontal
agreements could be competitively ben-
national
trade, or could be in the public interest,
and should therefore not be prohibited per se but
should be considered using the rule-of-reason approach.
Section 18 of the Act therefore provides
that applications for exemption of such agreements
could be made to the Commission. In terms
of section 19(2) exemptions can be granted if the
agreement contributes to, or is likely to contribute
to, or result in:
“(a) maintaining or promoting exports from Zambia;
distribution or provision of goods and services;
(c) promoting technical or economic progress in the
production, distribution or provision of goods and
services;
(d) maintaining lower prices, higher quality or greater
choice of goods and services for consumers;
(e) promoting the competitiveness of micro and small
business enterprises in Zambia; or
or would outweigh the lessening in competition
that would result, or is likely to result, from the
agreement.”
Professional associations whose rules contain a restriction
that has the effect of lessening competition
in a market may also apply in terms of section
22(1) of the Act for an exemption of the restriction
as long as it does not constitute a per se prohibited
horizontal or vertical agreement.
The provisions on vertical agreements 131 are under
section 10 of the Act, which simply state that “a
vertical agreement between enterprises is prohibited
per se, and void, to the extent that it involves
re-sale price maintenance”. The above means that
with the exception of re-sale price maintenance,
all the other vertical agreements are considered
using the rule-of-reason approach under the Act.
This is in recognition of the fact that most such
such as removal of pricing distortions, optimized
investment levels, and avoidance of transaction
costs. Re-sale price maintenance has been per se
prohibited under the Act because that practice is
prevalent in Zambia and has serious adverse effects,
not only on competition but also on consumer
welfare. Section 10(2) however provides
that a “supplier or producer may recommend a
minimum re-sale price to the re-seller of a good
or a service if: (a) the supplier or producer makes
it clear to the re-seller that the recommendation is
not binding; and (b) the product has a price stated
on it and the words ‘recommended price’ appear
binding resale price recommendations do not
constitute cases of prohibited resale price maintenance.
The treatment of re-sale price maintenance under
competition law differs from jurisdiction to jurisdiction.
In some jurisdictions, particularly in developing
countries whose economic activities are dominated
by few players, re-sale price maintenance is
per se prohibited because of its serious effects. In
other jurisdictions, the practice is increasingly being
considered using the rule-of-reason approach
uct
distribution. In its treatment of re-sale price
maintenance, therefore, the Zambian competition
legislation takes into account both considerations.
While it prohibits per se the practice, it also provides
that resale prices can be recommended. The
circumstances of allowing re-sale price recommendations
under the Act are very clear and do
not contradict the general prohibition.
The Act does not give examples of other vertical
agreements than re-sale price maintenance. This
may be because section 10 of the Act only deals
with vertical agreements that are per se prohibited.
Most vertical agreements are considered using the
rule-of-reason approach. They are also numerous,
and include agreements and arrangements on exclusive
distribution and dealing, tie-in sales, quantity
forcing, and franchises, which are all common
in Zambia. While the list of vertical restraints cannot
be exhaustive, it would assist the Commission
in its enforcement, and the business community
in complying with competition law, if the common
vertical restraints in Zambia are listed for guidance
purposes.
It is recommended that the Commission
through a Statutory Instrument lists the
common types of vertical agreements and
arrangements that restrain competition in
Zambia for the information of the business
community, and for the guidance of its
competition practitioners.