a tripartite report - Unctad
a tripartite report - Unctad a tripartite report - Unctad
PREFACE This comparative assessment report is part of the voluntary tripartite peer review of competition policies in the United Republic of Tanzania, Zambia and Zimbabwe. The purpose of this tripartite peer review is to assess the legal framework and enforcement experiences in each of the three jurisdictions; draw lessons and best practices from each jurisdiction; and examine the value-added of the harmonization of competition law and its enforcement in this subregion, as well as increased cooperation. The national reports review the competition policy systems in each of the abovementioned countries, and serve as a basis for the present comparative assessment report that addresses pertinent issues from a subregional perspective. I. INTRODUCTION The United Republic of Tanzania, Zambia and Zimbabwe have all introduced their competition law in the mid 1990s prompted by a process of privatization and liberalization that started in the late 1980s. After years of experimentation with a centrally planned economy, the opening up of ciencies and slow economic growth. The process of liberalization is not yet complete and regulatory restrictions are still widespread, a legacy of colonial times and socialist tradition. 1 In all the three countries the introduction of competition law occurred quite early in the process and by the mid 1990s all of them had an antitrust law and an active authority in place. The purpose of these laws was to: accompany the development of market mechanisms, making sure that existing dominant companies, often protected by decades of protectionism, would not abuse their position by blocking or delaying the entry of competitors ensure that markets would not be cartelized and that anticompetitive mergers would not lead to a substantial lessening of competition. advocate competition principles in regulatory reform In a way, the reasoning behind the introduction of antitrust laws in countries trying to liberalize and PREFACE improve the workings of the market mechanism is very much the same as that behind the introduction of antitrust provisions in the European Union Treaty back in 1957. Also in Europe the antitrust laws were meant to make sure that legal or regulatory protectionism dismantled by the European Treaty would not be replaced by private competitive restrictions. The reference to the European Union in this comparative review will sometimes be used for helping the three jurisdictions avoid some of the mistakes the European Union went through, especially in its early days. Furthermore, the example of the European Union may help to evaluate the more recent institutional developments associated with the regionalization of antitrust and the setting up of regional groupings, like COMESA, EAC, SADC, to which these jurisdictions belong 2 . II. COMPARATIVE REVIEW The purpose of the tripartite peer review is to analyze antitrust laws enforcement experiences of The United Republic of Tanzania, Zambia and Zimbabwe. The objectives pursued are to identify commonalities and differences and to provide some feedback on the actions to be undertaken in order for the competition authorities of these countries to become more effective. On the substantive aspects of the law some very useful suggestions for adjustments are contained in the reports for the individual countries. Certainly one major improvement would be for the three jurisdictions to at least converge on the way legal provisions are interpreted. This has been the process undertaken in the European Union where the interpretation of the substantive provisions of the law has constantly evolved through case law developments, new communications and regulatory reform, the legal provisions remaining always the same since would more often be the European Commission and then member States would follow, but sometimes member States would take the lead and the European Commission would follow. Having the same type of practices prohibited everywhere did allow the development of a standard and helped very much in the process of judicial review. For all 7 COMPARATIVE ASSESMENT
8 VOLUNTARY PEER REVIEW OF CLP: A TRIPARTITE REPORT ON THE UNITED REPUBLIC OF TANZANIA – ZAMBIA – ZIMBABWE these reasons this Report will mainly concentrate on the process of convergence among the three jurisdictions, while changes in the law will be suggested only when strictly necessary. As the experience of many countries shows, changing the legal texts takes a lot of efforts and, not being a process under the control of the competition Authority, there is no guarantee that the end result will actually be advantageous. Of course this is general statement and there are exceptions, like the recent experience of Zambia and the United Republic of Tanzania shows. The point is that we all have imperfect laws, but we could all have a perfect case tuning the way legal provisions are interpreted. In consequence this analysis will mainly concentrate on operational/ procedural/institutional aspects. As is well recognized, these aspects have been crucial to success of antitrust enforcement in all jurisdictions. The three jurisdictions under review will be mainly compared on the: substantive provisions of competition law; different investigative powers of the Authorities; sanctions imposable for procedural and substantive violations; role of the judiciary; •effectiveness of merger control; resources allocated to these authorities in relation to the tasks assigned to them; role regional agreements play in promoting a more effective antitrust enforcement environment; competition authorities’ enforcement records 1. The substantive part of the law: is a common interpretation possible? In all three jurisdictions, the law addresses anticompetitive agreements and abuses of a dominant position (merger control will be dealt in a separate section of this report). All economic activities are within the scope of the law and exceptions are limited. However, while the Tanzanian and Zambian laws are quite in line with international best practices, the Zimbabwe Competition Act would require some major reform. The major shortcoming of the Zimbabwe law is the fact that unfair trade practices (that can be sanctioned) and unfair business practices that can only be declared null and void. It is quite clear that omitting the possibility of sanctioning unfair business practices is a lack of coordination originating in the 2001 revision of the law. However this omission cannot be overcome through case law extension. It is not simply semantic. The Zimbabwe tices as related to imports, while unfair business practices are all other restrictions of competition. Section 42.3, where sanctions are introduced in the Zimbabwe act, should be extended to cover unfair business practices as well. As it now stands, the law lacks any deterrent function. Besides reformulating the provisions on sanctions, there is ample room for improvement in the Zimbabwe competition act. As the practice of major jurisdictions like the European Union and the United States shows, the substantive part of an antitrust law needs to be quite simple. All is needed is a general prohibition of restrictive agreements and abuse of dominance and a provision related to merger control. The UNCTAD model law suitably ful in this respect. Making the law too complicated and too detailed like in Zimbabwe, reduces, not increases, the possibilities of enforcement since of legal provisions. General provisions are much case. However provisions of a general type may prohibited. In order to enhance legal certainty, it is then necessary for competition authorities to issue guidelines that would serve a supplementary role easy-to-change way. This is the direction Zimbabwe should move. As the individual reports show, as a result of recent changes, the laws in the United Republic of Tanzania and Zambia are already in line with international best practices. In their laws there is a general prohibition of restrictive agreements and of abusing a dominant position. The main difference between the two jurisdictions is that Zambia’s Competition Act introduces, above certain market dividual exemption for horizontal and vertical
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8 VOLUNTARY PEER REVIEW OF CLP: A TRIPARTITE REPORT ON THE UNITED REPUBLIC OF TANZANIA – ZAMBIA – ZIMBABWE<br />
these reasons this Report will mainly concentrate<br />
on the process of convergence among the three<br />
jurisdictions, while changes in the law will be suggested<br />
only when strictly necessary. As the experience<br />
of many countries shows, changing the legal<br />
texts takes a lot of efforts and, not being a process<br />
under the control of the competition Authority,<br />
there is no guarantee that the end result will actually<br />
be advantageous. Of course this is general<br />
statement and there are exceptions, like the recent<br />
experience of Zambia and the United Republic of<br />
Tanzania shows. The point is that we all have imperfect<br />
laws, but we could all have a perfect case<br />
<br />
tuning the way legal provisions are interpreted. In<br />
consequence this analysis will mainly concentrate<br />
on operational/ procedural/institutional aspects.<br />
As is well recognized, these aspects have been<br />
crucial to success of antitrust enforcement in all<br />
jurisdictions.<br />
The three jurisdictions under review will be mainly<br />
compared on the:<br />
substantive provisions of competition law;<br />
different investigative powers of the Authorities;<br />
sanctions imposable for procedural and substantive<br />
violations;<br />
role of the judiciary;<br />
•effectiveness of merger control;<br />
resources allocated to these authorities in relation<br />
to the tasks assigned to them;<br />
role regional agreements play in promoting a<br />
more effective antitrust enforcement environment;<br />
competition authorities’ enforcement records<br />
1. The substantive part of the law: is a<br />
common interpretation possible?<br />
In all three jurisdictions, the law addresses anticompetitive<br />
agreements and abuses of a dominant<br />
position (merger control will be dealt in a<br />
separate section of this <strong>report</strong>). All economic activities<br />
are within the scope of the law and exceptions<br />
are limited. However, while the Tanzanian<br />
and Zambian laws are quite in line with international<br />
best practices, the Zimbabwe Competition<br />
Act would require some major reform. The major<br />
shortcoming of the Zimbabwe law is the fact that<br />
<br />
unfair trade practices (that can be sanctioned)<br />
and unfair business practices that can only be<br />
declared null and void. It is quite clear that omitting<br />
the possibility of sanctioning unfair business<br />
practices is a lack of coordination originating in<br />
the 2001 revision of the law. However this omission<br />
cannot be overcome through case law extension.<br />
It is not simply semantic. The Zimbabwe<br />
tices<br />
as related to imports, while unfair business<br />
practices are all other restrictions of competition.<br />
Section 42.3, where sanctions are introduced in<br />
the Zimbabwe act, should be extended to cover<br />
unfair business practices as well. As it now stands,<br />
the law lacks any deterrent function.<br />
Besides reformulating the provisions on sanctions,<br />
there is ample room for improvement in the Zimbabwe<br />
competition act. As the practice of major<br />
jurisdictions like the European Union and the United<br />
States shows, the substantive part of an antitrust<br />
law needs to be quite simple. All is needed is<br />
a general prohibition of restrictive agreements and<br />
abuse of dominance and a provision related to<br />
merger control. The UNCTAD model law suitably<br />
ful<br />
in this respect. Making the law too complicated<br />
and too detailed like in Zimbabwe, reduces, not<br />
increases, the possibilities of enforcement since<br />
<br />
of legal provisions. General provisions are much<br />
<br />
case. However provisions of a general type may<br />
<br />
prohibited. In order to enhance legal certainty, it is<br />
then necessary for competition authorities to issue<br />
guidelines that would serve a supplementary role<br />
<br />
easy-to-change way. This is the direction Zimbabwe<br />
should move.<br />
As the individual <strong>report</strong>s show, as a result of recent<br />
changes, the laws in the United Republic of<br />
Tanzania and Zambia are already in line with international<br />
best practices. In their laws there is a<br />
general prohibition of restrictive agreements and<br />
of abusing a dominant position. The main difference<br />
between the two jurisdictions is that Zambia’s<br />
Competition Act introduces, above certain market<br />
dividual<br />
exemption for horizontal and vertical
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