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ZAMBIA horizontal and vertical agreements, and for the share of supply threshold for authorization of such agreements that are not per se prohibited. In that regard, section 14(1) provides that: “Where the parties to – (a) a horizontal agreement, together supply or acquire thirty percent or more of goods or services of any description in a relevant market in Zambia; or (b) a vertical agreement, individually supply or acquire, at either one of the two levels of the market that are linked by the agreement, of any description in a relevant market in Zambia; the parties shall apply to the Commission for authorization of the agreement in the prescribed manner and form.” The importance of the above provisions, which are innovative in competition legislation in Southern Africa, is that it places upon parties to agreements that are potentially harmful to competition the onus of notifying the agreements to the Commission for examination of their competitive effects, given the fact that the Commission on its own cannot possibly identify such agreements for pre-emptive control. The Act therefore makes it mandatory for enterprises entering into agreements that meet the set thresholds to notify the Commission for the assessment of the competitive effects of the agreements using the rule-of-reason approach. The enterprises are thus given a chance to justify the agreements on the market. However, in noting that section 14 provides that the respective threshold for horizontal agreements is 30 per cent or more of goods or services in a relevant market, and that for vertical agreements is 15 per cent, the Commission is of the view that the opposite should be the case because horizontal agreements are potentially more harmful to competition than vertical agreements. The Commission’s view is supported. It is recommended that section 14 of the Act be amended to provide that the share of supply threshold for authorization of horizontal agreements be 15 per cent or more, and that for vertical agreements be 30 per cent or more, not vice versa. 115 Abuse of dominant position is prohibited under section 16(1) of the Act. The relevant provisions state that “an enterprises shall refrain from any act or conduct if, through abuse or acquisition of a dominant position of market power, the act or conduct limits access to markets or otherwise unduly restrains competition, or has or is likely to have adverse effect on trade or the economy in general”. The threshold for establishing the existence of dominant position has been lowered from the old Act’s 50 per cent of production or distribution of goods or services in Zambia, or any substantial part of the country, to 30 per cent in the new Act. The current provisions in terms of section 15 of the Act state that “a dominant position exists in relation to the supply of goods or services in Zambia if: (a) thirty percent or more of those goods or services are supplied or acquired by one enterprise; or (b) sixty percent or more of those goods or services are supplied or acquired by not more than three enterprises”. It is noted that the new dominance threshold of 30 per cent is rather low, and goes against the practice of higher thresholds that has been established in the region. 132 It is also arguable whether a rebuttable presumption of dominance would be more appropriate than a strict threshold. A few competition legislations in the region do not provide for a strict dominance threshold 133 , but experience has shown that this gives the competition authority too much subjective discretion in determining dominance, which can be challenged in law courts. A mixture of a rebuttable presumption of dominance and a strict threshold, as in South Africa, seems appropriate. The lowering of the dominance threshold from 50 per cent to 30 per cent market share under the Act has however created marked differences with other Acts of Parliament that regulate the same enterprises that are regulated by the Act. For example, the dominance threshold that is prescribed under the Information and Communication Technologies Act, 2009 (No.15 of 2009) is still 50 per cent of market share. 134 It is recommended that the dominance thresholds in all the Acts of Parliament that regulate enterprises in Zambia be harmonized. in Zambia, as in most other countries, are both of ZAMBIA
116 VOLUNTARY PEER REVIEW OF CLP: A TRIPARTITE REPORT ON THE UNITED REPUBLIC OF TANZANIA – ZAMBIA – ZIMBABWE an exclusionary and exploitation nature. 135 Section 16(2) of the Act provides that ‘abuse of a dominant position’ includes: “(a) imposing, directly or indirectly, unfair purchase or selling prices or other unfair trading conditions; (b) limiting or restricting production, market outlets or market access, investment, technical development or technological progress in a manner that affects competition; (c) applying dissimilar conditions to equivalent transaction with other trading parties; (d) making the conclusion of contracts subject to acceptance by other parties of supplementary conditions which by their nature or according to commercial usage have no connection with the subject matter of the contracts; (e) denying any person access to an essential facility; (f) charging an excessive price to the detriment of consumers; or (g) selling goods below their marginal or variable cost”. As stated in the Act, the list of abusive practices of enterprises in dominant positions is not exhaustive. For example, it does not include a common exclusionary practice in the Southern African region of “buying-up a scarce supply of intermediate goods or resources required by a competitor” 136 . It is noted that the list of abusive practices in Zambia’s new Act is somewhat different from the one in the old Act, indicating that the current list is based on the practical implementation of the old Act by the Commission and the changed economic conditions in the country. Section 17 of the Act provides for the determination of relevant product markets within which the share of supply or acquisition thresholds are to be met for the authorization of restrictive agreements (section 14(1)), and for establishing existence of dominant positions (section 15). In that regard, it is provided that “the Minister may, on the advice of the Commission, prescribe the procedure for determining the relevant product market within which the share of supply or acquisition thresholds are to be met under subsection (1) of sections fourteen and ”. The determination of relevant markets is critical - in competition analysis since all calculations, assessments, and judgements about the competitive implications of any given conduct depend on the size and shape of the relevant market. - tion of the relevant market is imperative to establish the context for the exercise of market power, and the competitive effect of a restrictive business practice under investigation. Once the market has tion can be examined with a reasonable degree of accuracy to determine whether it has or would have an anticompetitive effect. comprises a product and geographic dimension. The product market describes the good or service that is bought and sold. From a buyer’s perspective, the product market is determined from his ability to switch from one product to another closely substitutable product. The key element in this market is substitutability of demand. Demand-side substitution is considered to be the market since it refers to the ability of customers to switch to rival products. The most commonly used method of assessing demand-side substitution is the hypothetical monopolist test. The hypothetical monopolist test asks whether, in response to a price ber of customers would switch to other products such that the product supplier would not impose the price increase. If so, the product market must be expanded to include one or more additional substitutes. This process continues until a group tions are also assessed in the determination of relevant markets, when switching costs are very low so that producers of close products and services exercise competitive pressure. The determination of relevant product markets is often highly contentious, and cause of litigious disagreements between competition authorities and enterprises involved in competition cases as respondents. The prescription through a Statutory Instrument under section 17 of the Act therefore removes unnecessary disagreements on the matter. In that regard, the Regulations to the Act were gazette on 19 August 2011 as the Competition and Consumer Protection (General) Regulations, 2011 (Statutory Instrument No.97 of 2011). Regulation 3 of the Regulations on the determination of relevant product market provides as follows:
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UNITED NATIONS CONFERENCE ON TRADE
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UNITUNITED NATIONS CONFERENCE ON TR
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2 VOLUNTARY PEER REVIEW OF CLP: A T
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COMPARATIVE ASSESMENT COMPARATIVE A
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PREFACE This comparative assessment
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PREFACE agreements. . In the United
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PREFACE Finally in the United Repub
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PREFACE be set at a percentage of t
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PREFACE the market price but constr
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PREFACE (d) the extent to which the
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PREFACE pendence is maintained and
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PREFACE the effectiveness of the or
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PREFACE practical solutions, for ex
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ZIMBABWE FULL REPORT ZIMBABWE
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ZIMBABWE TABLE OF CONTENTS PREFACE
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ZIMBABWE This report is part of the
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ZIMBABWE With the growing political
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ZIMBABWE of restrictive practices,
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ZIMBABWE competition authorities do
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ZIMBABWE divided according to geogr
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ZIMBABWE The Commission in 2006 whi
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ZIMBABWE to take care of themselves
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ZIMBABWE (under Section 9); basical
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ZIMBABWE Full scale investigation i
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ZIMBABWE (ii) to produce any book,
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ZIMBABWE The fact that CTC has a co
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ZIMBABWE tariat of technocrats, who
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ZIMBABWE Table 2: Number of Competi
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ZIMBABWE Regarding the handling of
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ZIMBABWE (Emphasis by the author) b
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ZIMBABWE Section 5 (1) (f) that pro
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ZIMBABWE Whilst the arguments can b
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ZIMBABWE Anti competitive agreement
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ZIMBABWE by conducting its case det
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