Dangote-Bua spat calls for stronger sanctions against anti-competition behaviours

The long-running feud between two of Nigeria’s foremost industries spilt into newspaper headlines this week, each company accusing the other of sabotage, has led to calls for stronger rules and better enforcement against anti-competition behaviour by businesses.

The management of Dangote Industries Limited (DIL) while refuting claims by online media that it was engaging in economic sabotage, described the allegation as “spurious and a rehash of a similar report peddled out of malice by a competitor, BUA Group, masquerading as a concerned Nigerian in 2016.”

DIL management explained that the same false report back “in 2016 was now being given a fresh false slant by one Ahmed Fahad purporting it to be a new petition directed to the attention of President Bola Ahmed Tinubu and Mr. Jim Obazee, the Special Investigator probing the CBN, and subsequently different blogs and social media platforms have been carrying variants of this arrant falsehood to the detriment of our corporate reputation.”

The statement said “attempt by the authors of this misleading allegation to give it a fresh life in the media is baffling as the two newspapers that were misguided into publishing it as advertorial then (2016) have since publicly apologised to the Management of Dangote Industries Limited in writing as well as retracted the advertorial in its entirety in their respective publications. Indeed, BusinessDay and Leadership Newspapers admitted that the advertorial was sponsored by Messrs. BUA Nigeria Limited.”

DIL re-emphasised that foreign exchange for its numerous projects were sourced strictly from Interbank Foreign Exchange market in compliance with the CBN approvals and that “Letters of Credit” were established for the construction of the various operational plants and for the purchase of heavy equipment and spares required for the take-off of the Dangote Cement plants.

Read also: Dangote, Bua show grit amid global sugar crises

The company further stated that funds invested in its expansion project across African countries are legitimate capital investments in those countries and the repatriation of FX in sum of $576 million so far has helped to boost foreign Exchange earnings in Nigeria and stabilise the FX Market.

In its response, BUA Group noted “It’s with a profound sense of responsibility and a heavy heart that we address the claims and very cheap attempts at blackmail levelled against BUA by Aliko Dangote in a recent 7-page editorial following months of sponsored campaigns of calumny against us using third-party platforms. To put things in perspective, it’s imperative to revisit history—a history not of rivalry but of resilience; not of enmity, but of endurance.

The company went as far back as 30 years ago narrating tales of purported underhand dealings by Dangote to snuff life out of the business. The company claimed it started with the presentation of dud cheque by their rival. “He gave us a Societe Generale Bank of Nigeria Cheque, which bounced upon presentation to the bank. Unbeknown to us, this was a ruse that would lead to a court-sanctioned freeze of our assets orchestrated by Dangote.

For three agonising months, our accounts were garnisheed, warehouses shuttered, and our spirit tested. Yet, from the ashes of deceit, BUA survived.

It went downhill from there. The company accused the Dangote attempting to scuttle its plans for a sugar refinery in Lagos through those with political power.

Read also: Dangote, Lafarge, BUA post highest profit margins among global peers

BUA also accused Dangote of trying to run it out of the cement business after being issued licence by the Yar’adua government. “Our application to dock the floating terminal in Lagos met with resistance. We then decided to berth the ship at the terminal we owned in Port Harcourt. Despite this, we faced considerable pushback and it took the decisive intervention of late President Yar Adua, who directed that the Minister of Transport and the Chairman of NPA honour our right to contribute to the nation’s growth.

“But the hurdles didn’t end there. The drama intensified when Orwell Brown, a Deputy Comptroller General who was also an older brother to a Dangote Staff, launched a sudden strike, attempting to deport our vessel’s entire expatriate crew. It was a Friday that is forever seared into our memory—the shock of our expatriates rounded up, their confusion as they were shepherded onto a Dangote-funded one-way local flight from Port Harcourt to Lagos en-route Asia via Emirates.

“Upon hearing of what had happened, we reached out to Tanimu Yakubu, the then Chief Economic Adviser, who acted with the urgency that the situation demanded. His call to the CG of Immigration was a lifeline, and our expatriate team was brought back from the Emirates aircraft and not deported. The aftermath was swift action by the President, who ensured that such a misuse of power would not go unchecked. DCG Brown, caught in a tangle of undue influence, admitted what he did to the Minister, and he was later dismissed.

As expected these accusations and counter accusations have drawn considerable attention but with both companies publishing dirt about each other, it remains to be seen how this would enhance their individual esteem in the public’s eye.

More importantly, experts say it points to Nigeria’s need for stronger anti-competition rules. The very nature of capitalism lends itself to anti-competition behaviour, this is why governments ensure market rules engender fair competition.

In the late nineteenth-century, the United States developed competition policy to counterbalance concentrated economic power, which reformers feared might be wielded to influence political outcomes or trammel independent proprietors with unfair business tactics.

The growth of large-scale firms along with technological advances in industrial and agricultural production, improvements in transportation and communication networks and deflationary circles undermined weaker firms and encouraged corporation consolidations that attained greater economies of scale and scope in the 19th century, says a Harvard Review article.

Read also: Dangote, Bua, Lafarge, 5 states drive solid mineral revenue in Nigeria

These conditions are gradually becoming prevalent in Nigeria as firms like Dangote Industries, BUA Group among others are increasingly play pivotal roles in the economies of Nigeria and other African countries.

Anti-Competition Regulation in Nigeria

The Federal Competition and Consumer Protection Act 2018 (the Act) is the main anti-competition law in Nigeria. The Act establishes the Federal Competition and Consumer Protection Commission (FCCPC) as the regulatory body. The FCCPC has far-reaching powers including the power to enter and search premises, summon and examine witnesses, call for and examine documents, and do such other things as it considers necessary for the effective performance of its functions.

The Act further empowers the commission to check abuse by a company with a dominant position in a market.

“A company is said to abuse its dominant position where it charges an excessive price; refuses to give a competitor access to an essential facility when it is economically feasible to do so; and engages in an exclusionary act unless it can show that the technological efficiency and other pro-competitive gains outweighs the anti-competitive effect,” noted Ozi Nwadike, a legal expert at Pristine and Sage Attorney.

There is also a penalty for flouting the rule. “The punishment for contravention is a fine not less than 10 percent of its turnover in the preceding business year or such higher percentage as the court may determine under the circumstances of the particular case,” said Nwadike.

But applying these rules to politically-connected persons have been a tad difficult. A critical examination of the claims and counterclaims by both BUA and Dangote indicate efforts to influence government officials to give aid or undermine a rival.

“In other words, there is no way you can operate in these industries without selling your soul to politicians since they hold the powers to adnvance or cut you off,” said Ndubuisi Ekewe, a professor and head of Tekedia Institute, a business management outfit.

He further said in a post on social media, “As these two men fight, they are sending the wrong messages to the world on some of these critical sectors: how fast a president or a minister could pick your call is what really matters, and not the ideas you are bringing to the market.”

Competition encourages individual businesses to innovate and find ways to work more efficiently resulting in gains like lower prices, better quality products and services and more choice for consumers. This rarely leads to the emergence of stupendous wealth amid mind-boggling penury.

For competition to stay healthy, it is the responsibility of governments to enforce rules that will make businesses behave in an acceptable way towards competitors and suppliers.