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Latest African Developments: New Mozambique Competition Law – November 2013

Latest African Developments: New Mozambique Competition Law – November 2013

Theย Competition Lawย came into force on 10 July 2013. It applies to most economic activities inย or having an effect in Mozambique. Theย Competition Regulatory Authorityย (Autoridade Reguladora da Concorrรชncia) (โ€œthe CRAโ€) will enforce the Competition Law.

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

In respect of prohibited horizontal practices, all agreements, decisions and practices betweenย competitors are prohibited if such agreements substantially impede, distort or restrictย competition in all or part of Mozambique. Prohibited practices include price fixing, unjustifiedย โ€œprice oscillationsโ€ collusive tendering; and market division arrangements.[3]

Agreements between firms in a vertical relationship are prohibited if,ย inter alia,ย suchย agreements: apply discriminatory conditions in respect of prices or equivalent services;ย constitute a refusal to deal; impose obligations which are not related to the subject of theย contract; impose resale prices, minimum or maximum quantities; impose excessive pricesย 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, orย two or more enterprises. An enterprise has a dominant position if it does not encounter anyย โ€œsignificant competitionโ€ or if there are โ€œtwo or more enterprises that act jointly in a marketย where they do not encounter significant competitionโ€. Specific forms of abuse of dominanceย identified include: refusingย [5]ย to grant access to an essential facility; requiring or inducing aย supplier or a customer to not deal with a competitor; predatory pricingย [6]; and dumpingย [7]ย [8]. Price discrimination by a dominant firm is also prohibited.

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

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

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

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

[2]ย Article 15 of the Competition Law.

[3]ย Article 17 of the Competition Law.

[4]ย Article 18 of the Competition Law.

[5]ย In certain circumstances.

[6]ย Specifically, unjustifiably selling below cost price.

[7]ย Specifically importing goods at a price lower than that โ€œpracticedโ€ in the exporting country.

[8]ย Article 19 of the Competition Law.

[9]ย Article 21 of the Competition Law.

[10]ย Article 29 of the Competition Law.

[11]ย 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]ย Article 31 of the Competition Law.

Originally authored byย Irma Gouwsย andย Thandi Lamprechtย of South Africanย LEX Africaย member firm,Werksmans Attorneys.

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