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Nigeria Competition Law: Catching-up with the FCCPC on the Latest Trends and Policy Developments

posted 3 years ago

Introduction

Nigeria, the largest economy in Africa by GDP, is the latest jurisdiction on the continent to implement comprehensive competition law regime together with establishing an agency which is actively enforcing competition law. This is a particularly welcomed developed in light of the traditional lack of competition regulation in West Africa but also because Nigeria is likely to play a key a role in the African Continental Free Trade Agreement (“AfCFTA“) negotiations – where competition policy is currently been developed as one of the pillars of AfCFTA.

On 30 November 2021, I hosted a “fireside chat” with representatives from the Nigerian Federal Competition and Consumer Protection Commission (“FCCPC”) who provided great insights in relation to several key issues and developments in relation to Nigerian competition law. We touched on a range of issues from dawn raids to merger control to the status of its leniency policy.

The discussion was particularly timely in light of several draft regulations (“Draft Regulations”) which have been published for comment and are expected to come into force in 2022.

We summarise some of the key takeaways from that discussion below.

Merger control

Although the FCCPC has not yet prohibited any mergers, it has imposed both behavioural and structural conditions. The FCCPC does not merely “rubber stamp” merger applications and parties are advised to prepare comprehensive merger filings.

In what is a positive step, the FCCPC has catered for several categories of mergers which are unlikely to have an adverse effect on competition and these transactions might benefit from a simplified procedure which reduces the administrative burden regarding the filing forms but also reduces the period of review. Foreign-to-foreign mergers are one such category of merger that may utilise the simplified procedure.

The FCCPC also caters for “expedited review” periods which – subject to the payment of an additional filing fee – can significantly reduce the review period and is particularly helpful in the context of global filings.

Procedurally, the FCCPC has also recently introduced its online merger notification portal which was implemented during the Covid-19 pandemic. This is a welcomed development and should streamline the administrative filing process.

The FCCPC has also continuously amended its filing fees to bring these in line with international best practice.

One criticism raised was the lack of reasoned published decisions to which the FCCPC responded that the intention is that formal decisions will be published hopefully in the early part of 2022.

Investigative Powers and Dawn Raids

The FCCPC has broad investigative powers in terms of the Federal Competition and Consumer Protection Act (“the Act”). One such investigative tool that the FCCPC has recently used is conducting “dawn raids” (search and seizure operations). This follows an investigation into alleged collusion in the freight forwarding industry. The FCCPC has also received specialist training from the Federal Trade Commission in conducting dawn raids.

Speaking to the FCCPC representatives, there is certainly a clear recognition that dawn raids must be conducted with due regard to the correct process, treatment and handling of evidence and respect for the respondent (and its employees) rights.

In particular, dawn raids require a search warrant to be issued by the Federal High Court. A search warrant may be obtained either after the FCCPC has obtained prima facia evidence of a contravention arising from its own market monitoring processes or upon receipt of a third-party complaint.

Discussing the treatment of evidence, the FCCPC confirmed that while personal devices such as cell-phones are usually included in the search warrant, the FCCPC only has regard to evidence which is directly related to the subject of the investigation and private information and legally privileged information falls outside the scope of the warrant. Unlike several other jurisdictions, the FCCPC does not make use of third parties to collate the evidence. This is usually a helpful mechanism to ensure that the agencies do not have sight of documents which it ought not to (i.e. such as legally privileged documents).

The FCCPC’s Leniency Policy and Penalties

Although the FCCPC does not have a formal leniency regime in place, the FCCPC indicated that a formal policy will be published soon (hopefully during the course of 2022). Notwithstanding no such formal mechanism being in place, the FCCPC confirmed that parties may nonetheless approach the FCCPC to seek leniency.

The FCCPC retains discretion to grant immunity to parties who are the first to provide it with evidence that will assist the FCCPC in prosecuting other respondents.

In the event that formal immunity is not granted, parties may still benefit in approaching the FCCPC proactively and cooperate with the FCCPC as this will likely result a lower administrative penalty being imposed.

One important hallmark of the FCCPC’s current leniency policy (albeit an informal one) is that an applicant is required to admit liability and an applicant is not necessarily assured of receiving leniency. A formal leniency regime which sets out a clear framework for purposes of securing immunity would go a long way to encouraging parties to approach the FCCPC for purposes of seeking immunity.

In terms of penalties, international firms operating in Nigeria should take note that the FCCPC does not consider itself constraint to limiting penalty calculations based on local derived turnover only and may in certain circumstances consider international turnover (particularly where the parent company of the local subsidiary was responsible or involved in any contravention).

Finally, a contravention of the Act is a criminal offence. Although the FCCPC cannot prosecute parties for criminal conduct – as this is solely within the jurisdictional domain of the national prosecuting authority – the Draft Guidelines suggest that the FCCPC retains some discretion in determining whether parties ought to be criminally prosecuted as well. This is an important aspect which the Draft Guidelines do not expand on. It would benefit parties, particularly those seeking leniency or an early settlement, to understand precisely what degree of certainty the FCCPC is able to provide such parties if they chose to cooperate with the FCCPC.

Conclusion

Look out for the next edition as we intend unpacking several of the above topics in more detail.

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