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Latest African Developments: New Mozambique Competition Law – November 2013

Latest African Developments: New Mozambique Competition Law – November 2013

The Competition Law came into force on 10 July 2013. It applies to most economic activities in or having an effect in Mozambique. The Competition Regulatory Authority (Autoridade Reguladora da Concorrência) (“the CRA”) will enforce the Competition Law.

The Competition Law addresses merger control [1] and anti-competitive practices (which include horizontal agreements, vertical agreements and abuse of a dominant position).[2]

In respect of prohibited horizontal practices, all agreements, decisions and practices between competitors are prohibited if such agreements substantially impede, distort or restrict competition in all or part of Mozambique. Prohibited practices include price fixing, unjustified “price oscillations” collusive tendering; and market division arrangements.[3]

Agreements between firms in a vertical relationship are prohibited if, inter alia, such agreements: apply discriminatory conditions in respect of prices or equivalent services; constitute a refusal to deal; impose obligations which are not related to the subject of the contract; impose resale prices, minimum or maximum quantities; impose excessive prices or increase the price of a product or service without justification.[4]

The Competition Law further prohibits the abuse of a dominant position by an enterprise, or two or more enterprises. An enterprise has a dominant position if it does not encounter any “significant competition” or if there are “two or more enterprises that act jointly in a market where they do not encounter significant competition”. Specific forms of abuse of dominance identified include: refusing [5] to grant access to an essential facility; requiring or inducing a supplier or a customer to not deal with a competitor; predatory pricing [6]; and dumping [7] [8]. Price discrimination by a dominant firm is also prohibited.

Except for the specific forms of abusive behaviour by a dominant enterprise(s), the practices referred to above may be justified by proving that their objective will result in efficiency, technological or other pro-competitive gains.[9]

A range of penalties may be imposed on an enterprise found guilty of participation in anti-competitive practices, most significant of which is the CRA’s power to impose penalties of up to 5% of a company’s turnover in the preceding year.[10] [11] In addition, the CRA has the power to order divesture or disqualify a company from partaking in public tenders for a period of up to five years.[12]

Firms that do business in Mozambique are advised to consider the provisions of the Competition Law and ensure that their agreements and operations in Mozambique comply with this law.

[1] Articles 23-27 of the Competition Law.

[2] Article 15 of the Competition Law.

[3] Article 17 of the Competition Law.

[4] Article 18 of the Competition Law.

[5] In certain circumstances.

[6] Specifically, unjustifiably selling below cost price.

[7] Specifically importing goods at a price lower than that “practiced” in the exporting country.

[8] Article 19 of the Competition Law.

[9] Article 21 of the Competition Law.

[10] Article 29 of the Competition Law.

[11] Other penalties may also be imposed, for example, a fine of 1% of turnover for offences such as the failure to notify a merger, not providing information or providing false information in response to a request from the CRA.

[12] Article 31 of the Competition Law.

Originally authored by Irma Gouws and Thandi Lamprecht of South African LEX Africa member firm,Werksmans Attorneys.

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