The Competition and Fair Trading Commission (CFTC) has said it expects the Competition and Fair Trading Bill of 2024 to bring sanity to the market.
The bill, which is expected to be tabled during the current meeting of Parliament, seeks to repeal the Competition and Fair Trading Act (Cap. 48:09) and replace it with a new piece of legislation, under the same name, which provides for an improved regulatory mandate of the Competition and Fair Trading Commission which is aligned with international best practices on regulation of anti-competitive business conduct and unfair trading practices.
Under the current Competition and Fair Trading Act, when CFTC finds a person to have engaged in anti-competitive business conduct or unfair trading practices, the commission has been imposing fines directly on the infringing party.
However, in 2023, the High Court in Airtel Malawi Plc v Competition and Fair Trading Commission, Civil Appeal Cause No.17 of 2023, ruled that section 51 of the Competition and Fair Trading Act which the commission was using to impose fines and the Act as a whole, does not empower the commission to impose fines on the infringers of the Act.
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Following this ruling, the inability of the commission to impose fines on a person who contravenes the Act has significantly weakened its regulatory mandate.
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The bill also seeks to strengthen the regulation of mergers by different enterprises and also equip CFTC with enhanced investigative powers, including the authority to conduct market studies.
Commenting on the proposed bill on Tuesday, CFTC spokesperson Innocent Helema said
The prevailing CFTA does not include some key definitions and concepts in the regulation of Anticompetitive Business Practices (ABPs) and Unfair Trading Practices (UTPs).
Helema further said the CFTA does not have updated definitions of some relevant terms in the regulation of ABPs and UTPs.
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“For instance, the CFTA narrowly defines the term consumer. For this reason, vulnerable groups like such as contract farmers who do not fall within that definition are not effectively protected from UTPs.
“Excessive pricing of products and services has been one of the most prevalent misconduct by businesses. Unfortunately, the CFTA does not have provisions specifically prohibiting excessive pricing.
“Buyers, especially those involved in buying farm produce go scot-free under the CFTA when they buy produce at unjustifiably lower prices or enter into contracts they do not plan to honour. The CFT Bill has addressed all these gaps accordingly,” Helema said.
He observed that under the CFTA, when the Commission finds an errant enterprise, it has been imposing fines but that in 2023, in the CFTC vs Airtel Malawi Limited Case, the High Court ruled that Section 51 of the CFTA does not empower it to impose fines thereby weakening its regulatory mandate.
“The CFTC Bill has ably included the power to levy administrative fines taking into account the aggravating and mitigating factors,” Helema said.
Among others, the bill proposes to establish the commission and provide for its powers and functions and financing of its activities.
It also proposes to provide for better regulation of anti-competitive business conduct in addition to more detailed provisions on the review and control of mergers.
