Nigerian Competition Law: BA and Virgin Atlantic fined USD 135 million and USD 100 million – December 2011

December 2011

The Current Situation

The Federal Government is yet to adopt a Competition Law for Nigeria. To date, up to six Bills in respect of competition have been introduced in the Senate, but none have been passed. These include the:

1. Federal Competition Bill 2002;

2. National Anti Trust (Prohibitions, Enforcement) Bill 2004;

3. Competition (Anti Trust) Bill 2007;

4. Nigerian Trade and Competition Commission Bill 2008;

5. Nigerian Anti Trust (Enforcement, Miscellaneous Provisions), 2008;

6. Competition and Consumer Protection Bill 2009 – this is the most recent Bill but there have been no developments since its first reading in January 2010.

Specific industries

Regulators in several industries have powers to regulate competition within their particular industry including those set out below.

Capital Markets

The Securities and Exchange Commission (SEC) has the power under the Investment and Securities Act 2007 and the General Rules and Regulations of SEC 2011 to order the break up of a company, where it determines that the business practices of that company substantially lessens competition. Business combinations may only be effected with the permission of the SEC, which approval will be given only if the SEC finds that the combination is not likely to cause a substantial restraint of competition or create a monopoly.

The following are considered to be business practices capable of restraining competition and creating a monopoly:

1) The entry into agreements with other companies which have as their object or effect the prevention, restriction or distortion of competition in any part of a Nigerian market including those which:

a) Fix prices or any other trading conditions;

b) Limit or control production, markets, technical development or investment;

c) Share markets or sources of supply;

d) Apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

e) Make the conclusion of contracts subject to the acceptance of supplementary obligations which have no connection with the subject matter of such contracts.

2) The abuse by companies of dominant positions, for example:

a) Imposing unfair prices or other trading conditions;

b) Limiting production, markets or technical developments to the prejudice of consumers;

c) Applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

d) Making the conclusion of contracts subject to acceptance of supplementary obligations which have no connection with the subject of the contracts.

Telecommunications

The Nigerian Communications Commission is constituted under the Nigerian Communications Act, 2003 and its functions include the promotion of fair competition in the communications industry and the enforcement of compliance with competition laws and regulations which relate to the Nigerian communications market.

Electricity

The Nigeria Electricity Regulatory Commission is constituted under the Electricity Power Sector Reform Act 2005 and is responsible for the prevention of the abuse of market power within the electricity sector and whether or not to approve a merger/acquisition in the electricity sector in order to ensure that services are offered competitively.

Oil and Gas

The National Petroleum Directorate and Petroleum Products Regulatory Authority is constituted under the Petroleum Industry Bill 2008 and its functions include the development and promotion of competition in the industry

Aviation

The Nigerian Civil Aviation Authority is constituted under the Civil Aviation Act 2006 and has the power to investigate unfair methods of competition in the air transportation sector and to make regulations prohibiting and or discouraging anticompetitive practices.

Non-compete agreements

A non competition clause in contracts is generally enforceable in Nigeria. The Nigerian courts apply English common law principles of restraint of trade and will generally uphold non competition agreements that are not unreasonable and encourage or strengthen trade. The courts in Nigeria have enforced the rule that parties are bound by the terms of the contract which they have freely entered into and a court will generally not sanction an unwarranted departure from the contract