Uganda’s arduous journey to a domestic general competition law regime that started 20 years ago in 2004 has culminated into the passing of the Competition Act 2023, which was assented to by the President of Uganda this week.
The Act has the stated objective of promoting and sustaining fair competition in markets in Uganda as well as preventing practices that could have an adverse effect on competition in markets in Uganda.
Uganda is a member state in both the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) and has as a result been subject to the COMESA and EAC Competition regional competition regimes before the enactment of the Competition Act 2023. It is worth noting, however, that these regimes apply to matters with a cross-border effect within the respective (that is to say COMESA and EAC) regimes and heretofore, only the Comesa regime has been actively enforced. As such, from a domestic perspective, save for a few industry-specific regulations such as in the communications industry, there has not been a general domestic competition law regime applicable in Uganda governing matters that did not have a cross-border effect, but which nonetheless had an impact on local competition.
The newly enacted Competition Act 2023 sets out to redress this gap by establishing a robust framework for the regulation of players with dominant positions in their respective markets, proscribing the abuse of dominance, providing for consumer protection and for the regulation of mergers, acquisitions, and joint ventures in Uganda.
The Act places particular emphasis on anti-competitive practices and/or agreements and it takes specific aim at any practice that would result in an adverse effect on competition in the market including but not limited to; predatory pricing, price squeezing, cross-subsidization, refusal to deal, refusal to access to an essential facility, tying arrangements, unjustifiable discrimination amongst customers and/or suppliers, amongst others.
The Act further provides that where the competition authorities receive a complaint that there is an anti-competitive practice or agreement in place between two or more enterprises, they (the relevant competition authorities) will conduct an inquiry into the same. Should the inquiry establish that there is in fact an anti-competitive practice or agreement in place, which agreement or practice has an adverse effect on competition, then the competition authorities will have the authority to take suitable corrective action.
The Act also provides for the supervision and regulation of mergers, acquisitions, and joint ventures in Uganda by introducing a requirement to notify the relevant competition authorities of certain contemplated mergers, acquisitions, or joint ventures to be determined by reference to thresholds that will be prescribed by subsequent statutory instruments. In reality, this is not a notification requirement but an approval requirement since, upon notification, the competition authorities will have the right to approve or refuse the merger, acquisition, or joint venture. Any such merger, acquisition, or joint venture concluded without “notifying” the competition authorities will be void.
Finally, in order to create an impetus for compliance, the Act has introduced steep penalties to punish non-compliance with the provisions of the Act. As an example, the fine for failing to notify the competition authorities of a notifiable merger, acquisition or joint venture is a maximum of 10% of the annual turnover of the defaulting enterprise.
Upon the publication of the Competition Act 2023 in the Gazette and establishment of the relevant administrative institutions under the Act, it shall be incumbent on all industry players, chief among them, those with dominant market positions to acquaint themselves with their obligations under the Act and to ensure that they comply with them to avoid falling afoul of the law, with all the attendant financial and reputational risks that may be associated with.
Authors: Alice N. Blazevic, Partner and Patrick A. Mugalula, Senior Associate, at Katende, Ssempebwa & Company Advocates