PERFORMANCE UPDATE OF THE COMPETITION & CONSUMER PROTECTION COMMISSION FROM 1 ST JANUARY TO 31 ST DECEMBER, 2022
The year 2022 witnessed sluggish and yet promising recovery of markets as economies emerged from the effects of the Covid-19 pandemic which adversely affected businesses, supply chains, trade and logistics to the detriment of desired market fundamentals. The Commission remains optimistic that further gains shall be consolidated as we look to the new ways of doing business as part of the new normal.
The Commission remained committed to playing its critical role of safeguarding and promoting a competitive business environment and enhancing consumer welfare by prohibiting anti-competitive and unfair trading practices in the country through the objective enforcement of the Competition and Consumer Protection Act (“CCPA”) No. 24 of 2010. Despite economic fundamentals having a huge bearing on the cost of doing business, the Commission observed that anti-competitive conducts remained a major driver of increased cost of doing business in Zambia. Statistics from the cases handled indicate that anti-competitive conduct contributed between 9%-30% of the cost of doing business between Business to Business (“B2B”) and about 45%-100% of the cost to consumers between Business to Consumer (“B2C”) because of unfair trading practices. The most affected are the Small to Medium Enterprises (SMEs), with vulnerable capital positions which are greatly affected and thus their growth negatively impacted.
In 2022, the Commission saw an increase in the number of poorly executed services (unsuitable services), mostly in the banking and financial services sector which accounted for 64.47% of the two thousand four hundred and twelve (2,412) violated provisions recorded. Prominent among them were disputes around unilateral rearrangement of loan facilities; with often times recoveries continuing even after the agreed repayment periods. Other unsuitable service cases related to delayed reversals of mobile money and associated transactions. These include failed mobile to bank, delayed refunds for cancelled online purchases and delayed reversals related to failed ATM transactions. In addition to increasing consumer awareness, the Commission continued to collaborate with the Bank of Zambia (“BoZ”) and the Zambia Information and Communications Technology Authority (“ZICTA”) leveraging off their respective competencies in order to address some complaints from the Digital Financial sub-sector.
Other notable areas of concern related to defective products, especially mobile phones, which accounted for 13.14% of the violated provisions recorded. A total of K5,181,158 was recovered, constituting K3,258,261 recovered as refunds and K1,922,897 as replacements for defective or unsuitable goods. The Commission with its partners; the Zambia Compulsory Standards Agency (“ZCSA”) and Zambia Metrology Agency (“ZMA”), Ministry of Health (“MoH”) and Zambia Police Service, among others intensified inspection to rid the market of unsuitable goods. A total of 1,401 trading premises were inspected in the fifty-one (51) districts across Zambia. Close to One Million Kwacha (K1,000,000) worth of goods were seized and destroyed as they were unfit for sale.
Misrepresentation cases accounted for 12.52% of the violated provisions recorded. The Commission is concerned with the growing trend by some traders of deliberately giving false information to consumers in a bid to secure a sale, while knowing fully that such information was incorrect. Civil servants have been the most affected by the vice, particularly through purporting that they have sought for and committed to paying for insurance services, when in fact not.
Mergers and Monopolies
The Commission witnessed a 25% increase in the number of mergers reviewed from 68 in 2021 to 85 in 2022. The increase was due to the re-opening of the global economy post the Covid-19 period. Through merger reviews, the Commission noted that there was approximately K434,435,000 (equivalent to about US$25,555,000) worth of both local and Foreign Direct Investment (“FDI”) merger transactions. The sectors that predominantly contributed to the investments included, Banking & Finance, Retail and Wholesale, Manufacturing, Transport and Logistics, Agriculture, Real Estate, Services, Tourism and Hospitality, Health, Information and Communication Technology, Energy, Construction, Mining and Insurance. In these sectors, 3,505 jobs were created while 3,203 were maintained.
Abuse of Dominance
The number of firms the Commission investigated for abuse of dominance increased from nineteen (19) in 2021 to twenty-three (23) in 2022. Of the twenty-three (23) cases, seventeen (17) were closed with no fines being imposed. The Commission noted that most of the cases investigated were on alleged conduct of abuse of dominant position from various sectors namely: Information and Communication Technology, Aviation, Retail and Wholesale, Services, Agriculture particularly livestock, and Manufacturing. Some of the alleged anti-competitive practices investigated by the Commission were in form of exclusive dealing, tying and bundling, limiting/restricting production and imposing unfair trading conditions.
The Commission remained devoted to the fight in the elimination of cartels through various interventions aimed at attracting co-operation from persons or enterprises that were in contravention of the Act. The Commission utilized its Leniency Program to provide erring persons and enterprises total or partial immunity from civil and criminal sanctions. The Commission also provided the business community with an opportunity to have possible reduction of payable fines through the Settlement Programme. Despite the use of such initiatives, the Commission recorded a total of seven (7) cartel cases and concluded all of them within the year. Notable of the seven (7) were three (3) cases which involved Associations of small-scale businesses whose members were not registered as enterprises. These enterprises were further sensitized about the competition law and it's benefits thereof.
Restrictive Business Practices
Through its sector-based screening surveillance initiative, the Commission dealt with a total of thirty-six (36) restrictive business practice cases in 2022. Of these cases, the Services sector dominated with the most investigated cases accounting for twenty six percent (26%), followed by the Wholesale and Retail sector which accounted for eighteen percent (18%) while the Agriculture sector followed closely accounting for seventeen percent (17%). Other sectors investigated include Banking and Finance (15%), Manufacturing (15%) as well as Transport, Telecommunications and Tourism (at 3% each).
Research and Market Studies
The Commission continued to review the markets so as to make informed and timely interventions. In the year 2022, the Commission participated in the study on Regional Mobile Roaming Charges and the study on the Pharmaceutical Industry. Findings in the Roaming study indicated the need for regulatory review of wholesale roaming agreements to ensure that they were pro-competitive in nature and fully reflected market conditions.
The Pharmaceutical Industry study revealed the need to promote importation of active ingredients for domestic drug manufacturing through fiscal measures while balancing and making available affordable generics and growing the country’s potential and capacity to produce its own generic drugs and or patented drugs.
The Commission also participated in the African Market Observatory (“AMO”) project spearheaded by the Centre for Competition, Regulation and Economic Development (“CCRED”) with support from the COMESA Competition Commission (“CCC”). The project highlighted the need for farmers to be organised in order to increase their bargaining power for better returns in addition to increased regional market access such as in the East African regional market.
Education and Advocacy
With emphasis on the private sector as a major driver of economic growth and development, the Commission intensified its engagement with industry players and the general public through its education and advocacy programme. Enterprises that were engaged include Zambia National Commercial Bank Plc (“ZANACO”), IHS Zambia, First National Bank (“FNB”), Atlas Mara, Zambia Telecommunications Company Limited, members of the Poultry Association of Zambia (“PAZ”), Young Phiroz General Dealers, and Builders Warehouse among others. Priority had been given to sectors with a high potential to engage in anti-competitive conduct.
World Consumer Rights Day (“WCRD”) 2022
The Commission commemorated the 2022 World Consumer Rights Day (“WCRD”) under the theme “Fair Digital Finance” on 15th March 2022. Activities included radio and television programs, media briefings, edutainment videos, a TV documentary, newspaper articles and a virtual conference that was live streamed on social media to raise awareness on the importance of fair digital finance.
The Commission continued to witness appeals against the decisions of the Board of Commissioners to the Competition and Consumer Protection Tribunal (“CCPT”) on several cases. From the decisions of the Tribunal, appeals were made to the High Court, an indication that there is an increase in the exercise of rights. The year 2022 saw a total of 49 cases stemming from Restrictive Business Practices, Consumer Protection, Abuse of Dominance, and Mandatory Order applications before the Tribunal. In the year, the Tribunal delivered a total of four (4) judgments of which three (3) were in favour of the Commission, thirteen (13) cases were pending delivery of judgment, while fourteen (14) cases were settled. As at the end of the year, there were a total of eighteen (18) cases which were pending hearing before the Tribunal.
Additionally, the Commission in 2022, introduced a Compliance Unit in charge of ensuring that erring enterprises comply with the directives of the Board of the Commission. So far, the Unit has managed to collect a total of K32,496,037 from 29 enterprises that had violated the Act. The Commission is expecting to see an increase in the enterprises complying with the directives of the Board now that a more effective monitoring system is in place.