Three (3) years after the Mozambique Competition Regulatory Authority (ARC) took office, it seems appropriate to highlight the main developments in the application of competition law in Mozambique over this period, as well as the outlook for the future. This prospective analysis is especially relevant in the context of Mozambique’s integration into the Southern African Development Community (SADC) and the African Union, particularly within the framework of the African Continental Free Trade Area (afCFTA) Agreement, which Mozambique has ratified.
Let’s start by briefly considering the main results achieved so far by the ARC. With regard to prior merger control, from August 2021 to June 2024, forty-six (46) merger control notifications were submitted to the ARC for approval, involving a total turnover of 533 billion US dollars.
The three business sectors with the highest number of merger control notifications are trade, energy and manufacturing. In the area of anti-competitive practices, twenty-one (21) cases of anti-competitive practices were investigated, including three (3) cases of abuse of a dominant position and one (1) case of gun-jumping, i.e. the implementation of a merger before approval by the ARC.
The ARC has already sanctioned companies in three (3) cases. It has also carried out four (4) economic studies in the following sectors: the passenger air transport sector, the sugar production and distribution sector, the taxi and app-based transport services sector and the clinker and construction cement production sector.
In this regard, it is worth pointing out that the ultimate aim of competition law is to promote effective competition in the markets, which leads to lower prices, more innovation and greater diversity of choice for consumers.
With this in mind, it can rightly be said that the ARC has endeavoured to diligently fulfil its role as a guarantor of compliance with competition protection rules.
With the ARC now fully operational, it seems pertinent to anticipate what the future trends might be in terms of the application of competition law in Mozambique, given that the country is part of SADC and has ratified the afCFTA, where there have been significant developments in terms of competition policy.
These developments will require adjustments to Mozambique’s current competition legal framework in order to align it with regional and continental competition policies and guidelines. Although this convergence seems promising in theory, there are practical challenges that must be considered.
Competition in SADC
At a regional level, Mozambique is a member of SADC. Within SADC, with regard to competition policy and consumer protection, there are two key instruments: (i) the 1996 Protocol on Trade – in particular Article 25, which focuses on competition policy – and (ii) the 2009 SADC Declaration on Regional Co-operation in Competition and Consumer Policy.
By signing these instruments, member states committed themselves to enacting and enforcing competition and consumer protection legislation in their respective countries, to establishing a system of adequate judicial scrutiny and to creating an effective system of regional cooperation in these areas. In addition, specialised working groups on cartels, merger control and abuse of dominance were set up at SADC level in 2015.
The Protocol on AfCFTA Competition Policy prohibits commercial practices that are considered anti-competitive and/or incompatible with the AfCFTA market
The SADC Secretariat has recently drafted a framework competition policy and a model competition law, but this is awaiting final approval by the Trade Committee of the SADC Council of Ministers. Discussions are also underway on the potential creation of a regional competition authority, similar to the COMESA Competition Commission or the CEMAC Commission.
Within the framework of the African Continental Free Trade Area (AfCFTA), a critical instrument to take into account is the Protocol on Competition Policy, adopted during the 36th session of the Assembly of the African Union, held on 18-19 February 2023 in Addis Ababa, Ethiopia.
This instrument will enter into force 30 days after the deposit of the 22nd instrument of ratification, which has not yet taken place. The Protocol on AfCFTA Competition Policy prohibits commercial practices considered anti-competitive and/or incompatible with the integrated and unified AfCFTA market.
This Protocol sets ambitious competition objectives across the African continent, in particular the creation of a uniform African competition regime aligned with the economic integration objectives envisaged for the continent.
Within the framework of this regional and continental convergence of competition policy between African nations, there are important challenges that must be considered.
For example, in terms of merger control, the jurisdictions of the regional competition authorities and the continental competition authority must be clearly delimited.
The aim is to avoid unnecessary overlaps of jurisdiction in relation to the same cross-border transaction, which could lead to a multiplication of analyses of the transaction’s impact on competition and, consequently, significant delays in finalising it.
Furthermore, the application of competition rules in the states that are part of a regional or continental organisation such as SADC and the African Union should tend to be uniform between them, for the sake of legal certainty, which is crucial for economic agents. Indeed, one of the driving objectives of regional and continental integration should be precisely to reduce bureaucracy and regulatory uncertainty for companies, in order to increase competitiveness in the market.
There is a need to harmonise competition rules, looking at the SADC regional common market
Delimitation of competences
All these factors contribute to the need for a clear delimitation of powers and competences between the various levels – national, regional, continental – of competition law enforcement, but also to the need to introduce uniform and clear competition rules, which allow companies to distinguish legal from illegal conduct, not only in a specific country, but also in the regional and continental markets in which that country is integrated.
Another fundamental aspect concerns trade between African nations. According to the most recent report by the Economic Commission for Africa (ECA) on assessing the progress of regional integration in Africa, African regional integration is progressing, albeit at a slow pace. In fact, African countries continue to trade more with the rest of the world than with each other – intra-African trade as a percentage of global trade is around 13 per cent.
Thus, no matter how robust and integrated competition policies are, if African nations are not willing to adopt policies favourable to intra-African trade, such as the elimination of import duties and tariffs, regional convergence on competition law will not bring the desired benefits.
Thus, the critical question is whether African nations are politically, economically and socially prepared to create a single African market similar to the one that exists, for example, in the European Union. In our opinion, this will largely determine the success or failure of regional and continental convergence in terms of competition law.
