On 26 May 2016, in a bold move toward cross-border cooperation, the competition authorities of eight members of the Southern African Development Community (SADC) signed a memorandum of understanding (MoU) agreeing to cooperate with each other in their competition law enforcement activities. The MoU was signed between the competition authorities of the following SADC members:
- South Africa
The MoU only becomes valid once two-thirds of the SADC members have signed it. With only eight out of the 15-member SADC having signed the MoU at present, it is not yet effective..
The aim of the MoU is to enhance the effective enforcement of competition law in the region through cooperation between competition authorities, and to ensure conditions for effective goods and service markets for the economic welfare of the citizens of the member states.
Most notably, the MoU provides for all signatories not only to exchange information, but also to cooperate and coordinate with one another on investigations of mergers and complaints and prosecution of matters of common interest. The MoU creates a formal framework for the efficient cooperation between the signatory nations in relation to competition law enforcement in the region. Although the memorandum does not go so far as to define fully the ways in which the signatories will achieve the aims of the MoU, nor does it set out extensive guidelines for cooperation, it is likely that this is only the first step in a series of agreements that will lead to a complete technical framework for cooperation being implemented.
The signing of this MoU comes in the wake of the criminal liability provisions in South Africa’s Competition Act coming into force on 1 May 2016, reflecting a trend of increasing competition law enforcement by African competition authorities. This may also be an indicator that competition authorities want to ensure that the penalties for infringements of competition law become more onerous and transcend African borders where competition law enforcement has previously been confined within the borders of these countries.
Although African competition authorities have in the past cooperated and shared expertise with each other through forums like the African Competition Forum (as is evident from the mushrooming of investigations into firms in different jurisdictions once one authority launches its investigation), the formalisation of this conduct poses a risk to firms with a presence in one or more of the SADC jurisdictions. Where a company decides to share information with one competition authority, the provisions and objects of this MoU ensure that the information may then be shared with any of the other competition authorities, even to the detriment of the firm initially sharing the information. The only reprieve may be found in the confidentiality provisions of the MoU which limit the information that the competition authority is allowed to share under domestic laws and regulations. It will be important to ensure that confidentiality is claimed over all sensitive information that a firm wishes to share with a competition authority, whether be it in terms of a merger filing or in the context of a complaint.
The Inside Africa team would like to thank Shadi Kekana, Candidate Attorney, for her contribution to this blog post.