• Wednesday, June 12, 2024
businessday logo

BusinessDay

After the reggae, play the blues: A message to dominant and multinational businesses

After the reggae, play the blues: A message to dominant and multinational businesses

The title of this article finds root in Harrysong’s 2015 hit song, “Reggae Blues”. In this article, “reggae” represents anticompetitive and unregulated business practices while “blues” represents playing by the rules within a competition law regime.

Put simply, competition law is a legal system that regulates business practices by prescribing acceptable conducts and penalising harmful business practices like cartels, price-fixing, abuse of dominance. Its purpose is to address market distortions and promote competitive markets.

With an American origin, competition law has been adopted by several countries in their attempt to address market imbalance, promote economic development and protect consumers. By the end of the last century, several developed countries had already enacted competition laws, while their developing counterparts, especially those within the African continent lagged. The predictable outcome of the huge divide was that the continent became a breeding ground for big businesses and multinational firms to practice their reggae moves. With dreadlocks being synonymous to reggae artists, the lack of competition law watered and spiralled the growth of their dreadlocks that it grew wild beyond a reasonably acceptable length, but only within the African continent.

The adoption and implementation of acceptable business practices which are competition compliant is a necessity for businesses as they must abstain from engaging in anti-competitive practices

The reggae music played too loud to the detriment of the listeners, as well as music lovers to the extent that several countries within the continent saw the need to change the music to blues as they moved from command to market economies toward the late 1990s and early 2000s. As of January 2019, several African countries including Africa’s big 3 economies (Nigeria, Egypt and South Africa) had enacted comprehensive laws that regulated anticompetitive business practices. South Africa led the pack with its Competition Act 89 of 1998, followed by Egypt with the Law on the Protection of Competition and the Prohibition of Monopolistic Practices, Law No. 3 of 2005, and lastly, Nigeria with the enactment of the Federal Competition and Consumer Protection Act of 2019 (FCCPA).

The ascension of Nigeria to the cadre of countries with competition law is very significant both regionally within Africa and globally. With its consistent ranking as Africa’s biggest economy since 2014, coupled with the country’s population of over 200 million which positions it as the most populous African country and a global investment destination, its competition regime will most likely portend huge implications for dominant and multinational businesses across the world who hitherto, had become accustomed to reggae music while operating in Africa generally and Nigeria in particular. With the new competition regime, it is believed that a riot act has been passed, banning reggae and compelling businesses to stick to blues, with a sheriff in the form of the competition authority ready to bare its fangs on defaulters. This forms the background for the title of this article.

Read also: Five things that shaped Nigeria’s port business in 2021

The FCCPA contains remarkable offences against competition which businesses, especially the dominant ones should be wary of. These include; obstruction of investigation; offences against documents like destruction, falsification, alteration or withholding of documents; giving false or misleading information; and failure to appear or give evidence before the competition authority during investigations.

With the advent of the FCCPA, several changes are expected in the way and manner businesses activities within, or which have an effect within Nigeria are conducted. Firstly, dominant and multinational businesses and their directors who before now operated anti-competitively and foreclosed small businesses and potential rivals to retain and grow their customer base must change their manner of operation. The dance tune has changed to blues because the FCCPA protects domestic small and medium businesses from unfair market practices of dominant firms like bid-rigging and predatory pricing (also known as price war, which refers to a practice whereby businesses temporarily reduce product prices below the average market price in an attempt to increase their customer base and foreclose rivals and upcoming businesses who may not be able to sell below average marketprice). The adoption and implementation of acceptable business practices which are competition compliant is a necessity for businesses as they must abstain from engaging in anti-competitive practices especially, as both the violating firm and its directors can be held criminally liable under Sections 69(2), 74(2), 107(4)(c), 108(3)(c), 109(3)(c), 111(2)(c), 112(c).

Therefore, this calls for proactive measures by dominant and multinational businesses to create a competition compliance department or increase the mandate of their existing compliance units by employing new officers who are trained in competition law, especially on abuse of dominance, horizontal agreements and vertical agreements which could have anti-competitive elements. This will ensure that these businesses are regulatory compliant and up to date with competition law standards.

Also, there is a need to promote competition culture and create competition law awareness within all strata of businesses with a regular emphasis on the consequences of anticompetitive business practices. This will forestall or mitigate the risk of a member of staff’s inability to resist the allure of reggae. This is especially relevant in the context of dawn raids (unannounced early morning raid of a suspected company’s premises by the competition authority to interrogate staff, inspect and take away relevant documents and devices for an investigation) where every staff is expected to cooperate with the commission. The uniqueness of dawn raids is that the competition authority is most likely to speak and obtain information from lowly ranked members of staff because usually, those at the top cadre seldom resume work at dawn. It is therefore imperative for businesses to develop a comprehensive internal competition culture that cuts across every stratum of staff to ensure that only relevant, non-implicating information is divulged in the event of a dawn raid.

Dominant and multinational businesses should endeavour to play to the blues and do all within their means to resist the urge of going back to their old ways. Irrespective of the fact that the competition authority is still in its infancy days, it has developed sufficient teeth and is ready to bite. Examples of recent competition law enforcement against powerful companies like google abound in foreign jurisdictions. Close by in South Africa, Computicket, a ticketing company was fined in 2019 for abuse of dominance. Anticompetitive conducts present a new business risk to dominant and multinational firms, which can be avoided with the right structures and practices in place. Strict compliance is, therefore, a sine qua non, otherwise, businesses may be exposed to both civil and criminal penalties, which have the potential of running the businesses aground.

Uwadi is a 2021 UK Foreign, Commonwealth and Development Office Doctoral Scholar in Competition Law and Emerging Economies at the University of East Anglia, Norwich, England.