Malawi commemorates 2022 World Competition Day warns against misuse of market power

Many business enterprises, including small and medium enterprises (SMEs), are facing several challenges that emanate from abusive or anticompetitive conducts by enterprises who hold market power.

This was said on Monday by Commissioner for Competition and Fair Trading Commission (CFTC), Dr. Zacc Kawalala during the commemoration of the 2022 World Competition Day (WCD) at Sunbird Mount Soche Hotel in Blantyre.

Graced by COMESA Competition Commission (CCC) Commissioner, Siboniselizulu Maseko, Malawi celebrated the event under the theme, ‘Competition Policy and Misuse of Market Power’ as opposed to the global theme of ‘Competition Policy and Climate Change’ — to suit the country’s prevailing market forces.

Commissioner Zacc Kawalala

“It should be emphasized that it is not prohibited for enterprises to have market power,” Kawalala said. “However, it becomes the Commission’s concern when an enterprise uses that power to influence the market dynamics to the detriment of competitors.

“For example, in some situations, an enterprise with market power may prevent or restrict a competitors’ access to an essential input. This restriction may prevent competitors from competing with a particular enterprise on their merits

“I, therefore, appeal to enterprises — especially those with market power — to cease and desist from using that power to restrict entry of other players in the industry; to prevent other enterprises from conducting their businesses competitively; to influence upward trend of prices or to regulate sales quotas by individual enterprises.”

The panel discussion

He went on to say it has been “of grave concern to the Commission in recent times to see some enterprises excessively pricing basic commodities when most macroeconomic factors were almost stable”.

“The basic understanding of pricing is that enterprises hike commodity prices when there are some shocks in the economy. When there is excessive pricing, it is consumers that suffer.

“The law prohibit enterprises from abusing their market power in this manner. Where such incidents are brought to the attention of the Commission, we take relevant measures and issues penalties so as to curb such on the ground to see malpractices in line with the Competition and Fair Trading Act.”

The guests who attended the event

He thus reiterated the call that CFTC secretariat always campaigns for, that enterprises and the general public should report to the Commission any anticompetitive conduct they experience or notice in any market.

The commemoration was spiced by a panel discussion — aired live on Times TV — that had CFTC acting Director General, Apoche Itimu; CCC’s Commissioner Maseko; Wyson Kayira from National Bank of Malawi (representing the financial service providers) and Florence Kawera, CEO for Indigenous Business Association of Malawi (IBAM) as panelists.

The general observation from the panel discussion was that  enterprises with market power enhance their positions by forming associations where they fix and control prices — thus killing competition that should otherwise assist consumers to make better choices.

Itimu observed that market power monopoly increases prices of products and services because there is no pressure from other competitors.

She described this as a cartel system but was quick to say that CFTC has raised the bar of reaching out to consumers to report on any anticompetitive conduct they experience or notice in any market, saying their campaign is reaping fruits because case workload of complaints on unfair conducts are on the rise.

“Our mandate is to regulate for a competitive business environment by conducting market studies, surveillance, public hearings, preventions as well as mediations.

“Our mandate is far reaching because, as a quasi judicial body, our judgements are registered in the High Court,” Itimu said.

CCC Commissioner emphasized that their mandate is to regulate against unfair competition conduct between COMESA’s 21-member states and she took cognizance that Malawi’s theme resonates well with what the region is also trying to achieve in making sure market power is never abused.

She said Malawi was the first COMESA member state to sign the region’s Co-operation Agreement and that 17 states have fair trade and competition laws in place while 12 have them as very active — Malawi inclusive.

IBAM’s Kawera was very passionate when she observed that financial service providers are obsessed with policies that are made in offices without engaging the targeted consumer.

Despite Kayira emphasizing that banks do publicize changes to their products and services through print media, TVs, radios and displaying them in banking halls, Kawera insisted that many of such policies are not accessible to most consumers — with some printed in very fine font size as if to hide them.

Commissioner Kawalala made special mention of a quote from Consumer and Corporate Affairs Canada, which says: “Anti-competitive behaviour on the part of the dominant firms imposes artificial restraints on the competitive process, impeding the market from efficiently allocating resources.

“In a healthy, dynamic economy, goods and services are supplied by the firms, which can produce them most efficiently and adapt to the ever-changing demands of the marketplace”.

“With this quote in mind, I hope our dominant enterprises or those with positions of market power will start trading with competitive minds to promote entry and growth of small and medium players on markets and to alleviate harm on consumers from all corners of the country.”

The CFTC, in line with the world’s mandate, promotes competition and consumer welfare under the Competition and Fair Trading Act (CFTA) by among other things ensuring that enterprises do not engage in conducts that substantially lessen competition.

Among others, the Act prohibits enterprises that enjoy dominant position of market power in a market from misusing their market dominance at the detriment of their competitors as well as consumers.

World Competition Day commemoration dates back to December 5, 1980, when the United Nations adopted the international standard for competition laws — the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices.

It is commonly known as the United Nations Set of Principles and Rules on Competition, which has guided a large number of developing countries in developing and enacting their competition laws.

Overall mandate of CFTC is to regulate, monitor, control and prevent acts or behaviour which are likely to adversely affect competition and fair trading in Malawi while specific functions are:

* To carry out investigations on anti-competitive trade practices or unfair trading practices;

* To carry out investigations on a proposed merger;

To prevent or redress the abuse of a dominant position by an enterprise;

* To provide persons engaged in business with information regarding their rights and duties under this Act;

* To provide information for the guidance of consumers regarding their rights;

* To undertake studies and make available public reports;

*To cooperate with and assist any association or body of persons to develop and promote the observance of standards of conduct for the purpose of ensuring compliance with the provisions of this Act;

Any person can lodge a complaint with the Commission provided there is evidence in which CFTC investigates the complaint and may mediate for settlement between consumers and traders; order traders to give refund or exchange; issue Cease and Desist Order; issue company behavioural remedies and t dismiss case if not meeting any violations.

CFTC engages with the public on consumer rights and reaches out to the rural masses through community radios and recently re-engaged with the media appealing to the Fourth Estate to help in raising awareness of consumer rights.

Early this month, CFTC appealed to the public not to relent in monitoring and reporting offenders, who have previously been found guilty in unfair trading practices but are continuing their unfair practices, saying if found, such habitual offenders need to be given stiffer punishments in order to address the malpractices by most public service providers.

When found guilty, the penalties for offenders, under the CFTA, shall be liable to a fine of K500,000 and 5 year jail term and Itimu said — while the Government approved reforms to introduce on-spot fines for any consumer violations — the Commission is in the process of reviewing the Act to effect some proposed fines.

She said the set fine was enacted in 2013 and was stiff enough then but some big corporate businesses can just opt to pay the meagre K500,000 fine and continue carrying out unfair trading practices — thus the need to identify habitual offenders to for stiffer punishments under review by the Commission.

Malawi developed Competition Policy in 1997 and in 1998, Parliament enacted the CFTA while the Commission (CFTC) was established, in 2012-13, under the CFTA.

Over the years, the Commission has recorded over 1,000 cases and rising with some businesses found guilty more than once —  thus CFTC asking the public to continue reporting for possible habitual offenders.

Itimu emphasized that while they also conduct market surveillances in markets to ensure that the law is being followed, the public can alert CFTC through Toll free line 2489.

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