Rajiv Gujadhur of BLC Robert & Associates in Ebene highlights what investors need to know about Mauritius's competition law
Competition law in Mauritius aims to encourage sound competition by prohibiting business practices which reduce or eliminate competition. By so doing, consumer welfare is protected as market forces are not artificially manipulated by businesses in their quest for a larger market share. It is the Competition Commission (the ‘Commission’), established by the Competition Act 2007 (the ‘Act’), which is responsible for the impartial and unprejudiced regulation and promotion of competition in Mauritius.
The Act applies to every economic activity within, or having an effect within, Mauritius or a part of Mauritius. The Act binds the State to the extent that the State engages in trade or business for the production, supply, or distribution of goods or the provision of any service within a market in Mauritius which is open to participation by other enterprises. Agreements falling under the purview of the Act has been given a wide and inclusive definition. The Act effectively covers an agreement whether legally enforceable or not, one which is implemented or intended to be implemented in Mauritius and also includes an oral agreement, a decision by association of enterprises, and any concerted practices.
The Commission has considerable powers to compel disclosure of information by businesses. It may intervene and take corrective measures if it finds that the conduct of a business is anticompetitive in nature. This may be done through the issue of orders and directions, imposition of financial remedies and sanctions, enter into such contracts as may be necessary or expedient for the purpose of discharging its functions under the Act, concluding that a conduct constitutes an offence under the Act, working with foreign competition authorities and imposing charges and fees as required.
There are three main types of restrictive business practices which may be investigated by the Commission pursuant to the Act, with powers to take remedial action in the event of violation, namely:
Collusive agreements constitute the most serious restrictive business practices for which financial penalties may be imposed if the breach is intentional or negligent. The law also prohibits and renders void agreements among enterprises supplying or acquiring goods or services of the same description as far as these agreements relate to market sharing (customers or territories), price fixing, bid rigging, output restrictions and/or resale price maintenance (“RPM”). For instance, bid rigging would constitute conduct such as agreeing on the price, non-submission of a bid or on the terms and conditions to submit in response to an invitation to tender. Similarly, RPM occurs when a supplier/distributor forces or agrees with its reseller on the price at which the latter will resell the product to his customers.
The Commission may review horizontal agreements which are not collusive where the parties together supply or acquire 30% or more of goods/services on the market and Commission has reasonable grounds to believe that it has the object of preventing, restricting or distorting competition. For instance, agreements that have an object of excluding rivals from the market (such agreements might include the setting of technical or other standards between enterprises).
Vertical agreements that do not involve RPM may be reviewed by the Commission where it has reasonable grounds to believe that one or more parties to the agreement is or are in a monopoly situation that is subject to review. However, the Commission in such cases may issue directions to remedy the anti-competitive effect of the agreements but cannot levy penalty.
A monopoly arises when 30% or more of a particular good or service is supplied or acquired in the market by just one enterprise or when 70% or more of a particular good or service is supplied or acquired in the market by three, or fewer, enterprises. A monopoly itself is not necessarily in contravention of the Act. It is rather the abuse of the monopoly situation that constitutes the breach. It is effectively only practices having anti-competitive effects which will be considered as constituting abuse of a dominant position. Exclusive dealing, whereby a seller in a monopoly prevents a buyer from also buying from its competitors, would be an illustration of abuse as aforementioned.
A merger situation occurs when two or more enterprises, at least one of which carries out its activities in Mauritius or through a company incorporated in Mauritius, become under common control and ownership. No notification of the potential merger needs to be given to the Commission, however a merger is always amenable to review by the Commission if prior to such merger, one of the enterprises has a market share of 30% or more or if post-merger, the merged enterprise will have a market share equal to 30% or more. It is only when the merger might lead to a “substantial” lessening in competition within the market that the Commission will review it and impose appropriate remedies. This includes the power to require divestments and even a full unwinding of the merger, if need be. It is always open for the merging parties to seek guidance from the Commission before implementing a merger.
The Commission, through its “leniency programme”, motivates enterprises to denounce cartels. A participant may gain total immunity from financial penalties provided that it is the first to give evidence of the existence of a collusive agreement to the Commission prior to the start of an investigation and that the Commission is not already in possession of sufficient evidence to prove the existence of the suspected cartel activity. To benefit from immunity, this enterprise must not have initiated the cartel nor coerced any other enterprise into joining it. It is noteworthy that the Commission may also alleviate the financial penalty of an enterprise which assists with the investigation,
Mauritius, as member state, is yet to harmonise its domestic laws with that of the Common Market for Eastern and Southern Africa (COMESA). The COMESA Competition Regulations and the COMESA Competition Rules 2004, for instance, have merger control provisions different to the Act such that the merger notification requirement under COMESA is not reflected in domestic law. The Commission is currently working on assessing how and the extent to which COMESA competition laws may be domesticated into the laws of Mauritius.
BLC Robert & Associates