a tripartite report - Unctad

ZAMBIA
Section 27(1) of the new Act however gives the
Commission powers to review mergers that fall
below the prescribed threshold if the Commission
has reasonable grounds to believe that the
merger will raise serious competition and/or public
interest concerns, including that the merger: (i)
is likely to create a position of dominance in the
relevant market; (ii) may substantially prevent or
lessen competition; (iii) is concluded outside Zambia
and has consequences in Zambia that require
further consideration; and (iv) as its result, there
is likely to be competition and public interest factors
which require to be considered. This is quite in
order since competition authorities should retain
breaking them up after consummation if necessary
or preventing their consummation if it learns
cation,
if the mergers have serious anticompetitive
effects on the relevant markets.
While the conditions in section 27(1) of the new
Act giving the Commission powers to review mergers
that fall below the prescribed threshold that if
the merger “is concluded outside Zambia and has
consequences in Zambia that require further consideration”
and that “as its result, there is likely to
be competition and public interest factors which
require to be considered” might seem vague, they
have relevance to developing countries like Zambia.
Zambia has been affected by transnational
mergers that had been concluded outside the
country’s borders, such as the Cadbury-Schweppes/
Coca-Cola merger and the Rothmans of Pall-Mall/
British American Tobacco merger, which it only managed
to minimize their adverse effects on local
competition by examining their competitive effects
and imposing the necessary conditions on authorising
the Zambian subsidiaries of the merging parties
to implement the transactions.
-
Act however provides that “the Minister may, by
statutory instrument, on the recommendation of
the Commission, make regulations for the better
carrying out of the provisions of this Act”, and the
Minister in the Regulations to the Act that were
gazetted in August 2011 143 accordingly prescribed
merging parties’ combined annual turnover or assets
in Zambia, whichever is higher.
119
The rather controversial issue of the inclusion
of public interest criteria in competition regimes
also needs to be looked at from the point of
view of developing countries that have a multiplicity
of developmental policies to implement.
In such a situation, competition policy should
not be implemented with blinkers, oblivious of
the country’s other socio-economic policies but
should support and complement those policies.
A competition authority should however not be
given wide discretionary powers of deciding what
should constitute public interest in the context of
considering competition cases. The public interest
factors to be considered should be provided
for and indicated in the legislation or regulations.
For example in South Africa, it is clearly provided
for that in investigating and analysing the likely
effects of a merger consideration is also made of
the likely impact that the transaction would likely
have on the following public interest grounds: (i)
a particular industrial sector or region; (ii) employment;
(iii) the ability of small businesses, or
vantaged
persons, to become competitive; and
(iv) the ability of national industries to compete
in international markets. Also in the determination
of mergers, public interest factors should not
override purely competition factors related to the
major substantive test of substantial prevention
or lessening of competition in the relevant market.
The substantive test in assessing mergers in
terms of section 30(1) of the Act is “whether the
merger is likely to prevent or substantially lessen
competition in a market in Zambia”. In that assessment,
section 30(2) provides for a number of
factors that the Commission must take into account,
as follows: “(a) the levels of concentration
of players in the relevant market; (b) the creation
or strengthening of barriers to market entry; (c)
the level of imports in the relevant market; (d)
the extent to which there is countervailing buyer
or supplier power in the relevant market; (e) the
availability of substitute products in the relevant
market; (f) the likelihood of the merger removing
from the market an existing effective and vigorous
competitor; (g) the dynamic characteristics of
the market including growth, innovation, pricing
and other inherent market characteristics; and
(h) the risk that a position of dominance may be
abused”.
ZAMBIA