NaCC tackles anti-competitive behaviour

By Honorine Kaze
October 2015
Prime Business

The Namibian Competition Commission (NaCC) has made major strides in addressing non-competitive behaviour in the Namibian market to the benefit of the economy.

The NaCC was established in terms of the Competition Act 2 of 2003 to regulate competition issues across all sectors. As the principal institution to promote and safeguard fair competition in Namibia, it regulates over 80 000 business entities.

It has, since its inception, recorded about 62 complaints filed under Restrictive Business Practices (RBP), of which 45 complaints have been closed, 17 are still active and about seven of the active cases are either already before court, or ripe for court.

Restrictive Business Practices (RBP)’s Acting Director Ashley Tjipitua said anti-competitive conduct by entities, public or private, has negative consequences within the market. Such practices usually result in competitive harm to market participants.

“Investigations into restrictive conduct are usually triggered by either complaints from third parties or matters initiated by the Commission mero motu. Complaints received from third parties are screened for relevance so as to ensure that the complaint falls within the ambit of the Competition Act. Once that has been ascertained and a prima facie case has been established than the case would usually go into a full-fledged investigation. In other instances third parties would file complaints, but elect to remain anonymous, such matters are dealt with as cases initiated by the Commission and the same procedures are usually followed,” she explained.

“We have received many complaints over the years, but in many cases we did not find any contravention because evidence was not there, or the complaint was not competition-related,” she added.

The Commission is yet to prosecute any cases of restrictive practice, recently however an investigation was concluded and gazette in a matter against the Namibian Association of Medical Aid Funds (NAMAF) and 9 medical aid funds.

However, before the Commission could bring an application before the High Court to enforce its findings, NAMAF filed an application in which they challenged the jurisdiction of the Commission. This matter is set down for hearing in November 2015.

On a different matter which also involved restrictive practices, the Commission concluded a consent agreement with Professional Provident Society Insurance Company Limited (PPS) Namibia and Sanlam Namibia for having engaged in anti-competitive behavior. The agreement was gazetted, however the matter is yet to be brought before Court.

Amongst the cases investigated, a marketing agreement against the Commission between the same companies, Professional Provident Society Insurance Company Limited (PPS) Namibia and Sanlam Namibia, was evaluated. She further explained that the cases brought to the NaCC are divided into various categories under the Restrictive Business Practices’ mode.

Such categories include first ‘restrictive agreements, practices and decisions’, with the focus in this instance being on agreements, be it explicit or tacit agreements which have the effect of preventing competition.

“This will include agreements concluded between parties operating within a horizontal relation,” she stated. RBP also caters for abuse. “A firm’s ability to raise its prices is usually constrained by competitors, and the possibility 

that its customers can switch to alternative sources of supply. When these constraints are weak, a firm is said to have market power and if the market power is great enough, to be in a position of dominance or monopoly”, she continued.

There is also a loyalty rebate, which refers to offering discounts or rebates for customers which is viewed as a way of making the customer overlook other sellers. Another example of abuse would be the ‘tying and bundling’ method, which is commonly defined as a dominant firm selling one product only on condition that the buyer also purchases a different product, or agrees that it will not purchase the tied product from another supplier.

This also includes the sale of products or services which could be viewed as separate, but are only sold together as a bundle. Tied and bundled discounting may harm competition or lead to anti-competitive foreclosures and contribute to the maintenance or strengthening of market power.

Excessive pricing also falls under abusive dominance, which refers to prices set significantly above competitive levels as a result of monopoly or market power.

“Most of the complaints we have now is on abusive dominance, specifically on royalty rebate, and another one on exclusionary dominance, where a specific player compels his customers not to get services from other players in the market.

We have also received one on restrictive agreement, sporting a clause in the business contract which excludes competition, called the non-competition clause,” she noted. Tjipitua, however, said the NaCC has not yet taken a stance over the emotive issue between Air Namibia and Flyafrica.

“We have received a lot of queries about our role within the case, but the truth is that we do not have a role to play at this stage as there have not been any complaints brought to us. There were concerns by many on Air Namibia blocking entry onto the market for Flyafrica, which might not necessarily be the case if they have presented legitimate reasons,” she emphasized.

She also revealed that there are not many cases coming from the tendering system because of a poor detection mechanism.

“In this instance, we are busy putting together measures allowing us to detect such cases. We are entering into agreements with entities such as the Anti-Corruption Commission (ACC) and the Tender Board. We have already signed a memorandum of understanding with the ACC, and we are in talks with the Tender Board for a possible agreement,” she added.

“Competition law applies to all industries and entities, unless specific exemption is made in terms of the Act. Section 3 of the Act excludes application to certain activities such as collective bargaining activities in terms of the Labour Act, or goods and services exempted by the Ministry of Industrialization, Trade and SME Development,” the official said.