a tripartite report - Unctad

ZAMBIA
4. COMPETITION LAW
ENFORCEMENT
4.1 Competition Case Load
According to the old Act, cases handled by the
Commission were divided into seven categories: (i)
relocation of plant and equipment (section 5 of the
new Act and section 6 of the old Act); (ii) restrictive
business practices (Part III of the new Act and section
7 of the old Act); 168 (iii) mergers and acquisitions
(Part IV of the new Act and section 8 of the
old Act); (iv) trade agreements (Part III of the new
Act and section 9 of the old Act); (v) trade associations
(Part III of the new Act and section 10 of the
old Act); (vi) control of concentrations of economic
power (section 11 of the old Act); and (vii) unfair
trading and consumer protection (Part VII of the
new Act and section 12 of the old Act).
Cases involving relocation of plant and equipment
fall under the general functions of the Commission
of monitoring, controlling and prohibiting acts
or behaviour which are likely to adversely affect
competition and fair trading in Zambia. It is arguable
whether the Commission has legal basis under
competition law to consider relocation of plant
and equipment from Zambia if such relocation is
not connected with any restrictive business practice.
The provisions of the Act that the Commission is using
to consider the plant and equipment relocations
also do not make any reference to such practices.
The reason for, and rationale behind, the Commission’s
monitoring and controlling of relocation of
industrial assets from Zambia was amply given by
the former ZCC in its 2009 Annual Report. In that
Report, it was stated that:
Box 15: Relocation of Plant and Equipment Explanation
151
“Relocation of company core assets outside the
Republic of Zambia was a problem that resulted from
the privatization of formerly State-owned Enteprises
(SOEs) in which key industrial machinery and/or
equipment found its way outside Zambia without any
regulatory intervention. Government realized this
threat of ‘asset stripping’ and thus, the Commission
was mandated to monitor and control the movement
of such assets outside the country under section 6 of
the Competition and Fair Trading Act, Cap 417 of the
Laws of Zambia.
The rationale for controlling the movement of assets
outside Zambia by private companies has been based
on the prevention of asset stripping of core assets,
which was prevalent in the early years of the postprivatization
period.
It is however, important to note that NOT all relocations
are of concern under Section 6(1) or Section 7(1) of
the Act. The essence of conducting an assessment of
the relocation is to prevent stripping of ‘core’ company
by the applicant, which conduct might impair the
attainment of the objectives of the Act such as ensuring
and services in the economy.
The following categories of relocations are not of
concern:
(i) spare part of machinery and/or equipment whether
for repair or not;
(ii) motor vehicles such as used in mining, drilling, etc.;
(iii) other assets that initially were brought to Zambia
completion of contractual assignment.”
The ZCC in its 2008 Annual Report had explained
in some detail the Commission’s involvement in
the relocation of plant and equipment from Zambia
as in Box 15 below:
Section 6(1) of the Competition and Fair Trading Act empowers the Zambia Competition Commission to “monitor,
control and prohibit acts or behaviours which are likely to adversely affect competition and fair trading in Zambia”.
It is important to note that the relocation or export of core company assets is not a contravention in itself as no
offence has been committed but only if such transaction has an adverse effect on competition and fair trading in
Zambia. Consequently, business organizations are required to notify the Commission of such transactions.
The nature of such intervention strictly addresses the competition concerns and public interests that may arise
especially for permanent relocations. The Commission wishes to ascertain whether the effect of such a relocation
of plant and machinery will substantially lessen competition in the relevant market?
preserving a high level of competition in the country. In considering whether or not to grant authorization to a
proposed relocation or export of assets from Zambia, the Commission’s main concern will be to ensure that the
ZAMBIA