The Competition and Fair Trading Act (“CFTA”) of 1998 has been replaced by CFTA 2024. CFTA 2024 came into force on 1st July, 2024.
CFTA 2024 has been amended to align with international best practices in the enforcement of competition and consumer protection and recent developments in the enforcement of competition and consumer protection law.
Summary of the key changes
Introduction of Suspensory Merger Notification
CFTA 1998 provided for voluntary notification of mergers and acquisitions which meant that mergers having potential harm to competition process and consumer welfare could be effected without seeking authorisation from the Competition and Fair Trading Commission (“CFTC”).
CFTA 2024 has made notification of mergers and acquisitions mandatory, based on determined thresholds.
The Thresh holds have not been announced as yet and are likely to be announced in the next three weeks.
CFTA 2024 Act has also expanded on the provisions on anticompetitive business practices, to make it more effective to regulate and enforce. These areas include: restrictive business practices; collusive conducts (cartels); abuse of market power and also mergers and acquisitions.
Consumer Protection
The CFTA 1998 narrowly defined the term “Consumer”. CFTA 2024 has expanded the definition of Consumer with a view to protect consumers of technology, digital products, and other users of goods or services for purposes of production of other goods or services.
The CFTA 2024 has also included several types of unfair trading practices such as :
- failure to give warranty or guarantee on goods for long term use;
- improper or insufficient labelling of products;
- failure to disclose material information about the products supplied;
- engaging in excessive or exploitative pricing of the products.
- imposition and implementation of unfair terms in consumer contracts.
Abuse of Buyer Power
The CFTC 1998 focused on abuse of supplier (seller) power and not the abuse that arose from powerful or dominant buyers. This made it difficult to deal with malpractices by buyers.
The CFTA of 2024 has included various provisions to redress malpractices resulting from abuse of buyer power. The include conducts such as :
- delays in payment of suppliers, without justifiable reason, in breach of agreed terms of payment;
- unilateral termination of commercial relationship, without notice or on an unreasonably short notice period, and without an objectively justifiable reason;
- refusal to receive or return any goods or part thereof without justifiable reason, in breach of the agreed contractual terms;
- transfer of commercial risks meant to be borne by the buyer to the suppliers;
- demands for preferential terms unfavourable to the suppliers;
- demanding limitations on supplies to other buyers;
- reducing prices by a small, but significant, amount where there is difficulty in substitutability of alternative buyers or reducing prices below competitive levels; or
- bidding up prices of inputs by a buyer enterprise with the aim of excluding competitors from the market.
Penalties for Violations
Under the CFTA 1998 there were powers to issue administrative penalties . include The CFTA 2024 gives express powers to the CFTC to issue administrative orders. Under CFTA 2024, the fines to be imposed will be (i) up to 5% of annual turnover if it is an individual; or (ii) up to 10% of annual turnover if it is a company. There are also various Orders that the CFTC can impose to redress the malpractices. These include orders to: give refunds, return or exchange defective products, withdraw false advertisements, supply the advertised/promised goods and services, and cancel unfair and exploitative contracts.
Suitability and Independence of Commissioners for the CFTC
Under the CFTA 2024 , The Commissioners of the CFTC are required to be sufficiently scrutinized for their qualification and suitability for their functions, but also guarantee utmost independence. The CFTA 2024 has provided that the appointment and removal from office of the Commissioners will be subjected to the scrutiny of the Public Appointments Committee of Parliament.
