The launch of the African Continental Free Trade Area (AfCFTA) negotiations in 2015 was distinctive in that AU Heads of State and Government agreed that negotiations on trade in goods and in services would be conducted simultaneously. Until then, the practice generally has been to negotiate trade in goods first, and services subsequently. However, the negotiations do not stop here; for, at the start of the process in 2015, the AU had set the tone for a deeper level of integration by committing to take up some so-called ‘WTO-plus issues’ in a second phase of the negotiations. These issues include, but are not limited to, investment, competition policy, and intellectual property rights (IPR). E-commerce and digital trade could be another issue.
I will thus focus more on competition policy. The second phase of negotiations is to focus on competition law and policy to facilitate free trade. In the absence of policies regulating anti-competitive behavior by firms both domestic and, especially, foreign, there may be a tendency for businesses to abuse their dominant market positions through cartels, predatory practices, and tacit market-sharing agreements, which result in reduced consumer choice and, often, lower quality, and higher prices. Such practices hurt consumers and small firms and can interfere with the efficient functioning of markets, ultimately reducing economic dynamism and growth. Competition policy aimed at promoting fair and healthy competition can thus ensure efficient market outcomes and expanded opportunities for small and medium enterprises to thrive.
In Africa, the need for “a common competition policy and law to protect and promote free competition and permit harmonization of trade and investment laws and regulations throughout the region” was highlighted early on by ECA (2004) in its first ARIA Report. Recently, the same point has been reiterated by Luke and MacLeod (2017), who argue that the AfCFTA can serve as a vehicle to address cross-border competition issues through a continental competition framework.
No objectives have yet been set for the competition protocol, but it is not hard to see that these should include the following:
1. Enhancing competition to promote market efficiency, inclusive growth, and structural transformation of African economies;
2. Safeguarding gains from AfCFTA liberalization by ensuring they are not undermined by anti-competitive practices;
3. Strengthening the region’s capacity to deal with such practices;
4. Harmonizing minimum standards of corporate conduct; and
5. Improving governance and transparency over competition policy in Africa
However, the competition policy and Protocol may get a backlash because of a few challenges that may arise in trying to implement it. This is because there is a plethora of competition regimes and institutions across the continent, which an AfCFTA competition protocol will have to rationalize. Twenty-three (23) countries have a competition regime enforced by a competition authority. Of these, however, only 15 have comprehensive competition laws that are strictly enforced (World Bank, 2016). Ten countries have competition law but no competition authority; 4 countries are at an advanced stage of developing competition legislation whilst the remaining 17 countries either have no competition law or are at the early stages of preparing one. Even among countries with competition legislation, there are wide variations in content, coverage, and substance.
Furthermore, the founding treaties of the major African Regional Economic Communities (RECs) also include competition policy or laws, but these differ institutionally, with some RECs (e.g. COMESA and EAC) establishing supra-national regional competition authorities while others (e.g. SADC) operate through a cooperation framework (ECA et al., 2019). In the case of a supra-national institution, member-states delegate power to an independent apex authority whereas a cooperation framework involves sharing information and experiences without any mandate to deal directly with cross-border cases.
The existence of competition laws and institutions at both the national and regional levels means that AfCFTA negotiations in view of a continental competition protocol will not have to start from anything. However, negotiators will have to deal with the heterogeneity and varying complexity of African competition regimes, and emerging and other issues (e.g. buyer power, public procurement) in search of a harmonized approach. They will need to coordinate across national, sub-regional, and regional efforts on cross-border anti-competitive conduct; leverage existing competencies; build the capacity of member-states without national competition laws; establish mechanisms to review competition cases, and set up appropriate continental institutions.
However, to make the proposed Competition Protocol and policy work, the operative elements of an AfCFTA competition policy protocol will draw on the relevant provisions in national and regional competition laws. However, it is the design of the enforcement modalities that will determine how ambitious Africa is about a continental competition regime. Negotiators will have to decide between a supra-national AfCFTA competition authority, a cooperation framework, and a sequential approach in which a supranational authority enforces competition law through a competition network (ECA et al., 2019).
In terms of coverage, the protocol must encompass the main substantive competition issues, including cartels, mergers, abuse of buyer power, and anti-competitive agreements. It should embrace consumer protection in a dedicated chapter. A strong consumer policy in line with international standards can safeguard consumer rights while ensuring that consumer protection measures do not become (unintended) barriers to trade. Indeed, it is common for consumer protection policy to be integrated with competition policy both substantively and institutionally. Finally, a separate continental procurement policy can complement the competition protocol.
They should also address the issue of some member states like Uganda which does not have competition policy and law and how they can be harmonized with states like Kenya which have an already established structure on competition law and policy. This will help the smooth enactment and promulgation of competition Protocol and Law in regional trade.
The writer Muganga Ambrose Ibabaza is a Lawyer and AfCFTA scholar.