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COMESA COMPETITION COMMISSION TO INVESTIGATE DIGITAL MERGERS

By NOMFANELO MAZIYA | 2024-09-01

The COMESA Competition Commission (CCC) is set to embark on a comprehensive investigation into digital mergers, a move necessitated by the rapid evolution of the digital landscape and the potential anti-competitive implications of such mergers.

This was revealed by CCC Director and Chief Executive Officer (CEO) Dr Willard Mwemba during a press conference at the 8th Sensitisation Workshop for Business Reporters in Livingstone, Zambia on Tuesday.

The COMESA Competition Commission's (CCC) decision to investigate digital mergers has significant implications for Eswatini businesses.

As a member state of COMESA, Eswatini is directly affected by the commission's regulations and decisions.

Businesses involved in digital mergers or acquisitions, even if they are domestic transactions may face increased scrutiny from the CCC.

The commission will review these deals to assess their potential impact on competition within the COMESA region.

If the CCC finds that a merger is anti-competitive, it may impose conditions or even block the deal.

This proposed regulation comes after a comprehensive review process of the COMESA Regulations 2004 that began in May 2021 and culminated in the drafting of the proposed regulations in May this year pending approval.

“It is a process that has taken a long time because we want to do a good job and engage all stakeholders,” said Dr Mwemba.

The revised regulations, which are expected to be implemented by December 2024, aim to modernise the region's competition framework and ensure its relevance in an increasingly interconnected and technology-driven world.

The CCC has engaged with stakeholders across the region to gather input and ensure that the new regulations are responsive to the needs of businesses and consumers.

As per the existing regulations, while designed to address specific concerns, may not adequately capture the complexities and nuances of digital mergers in today's world.

One of the key concerns raised by Dr Mwemba is the potential for digital mergers to stifle competition and reduce consumer choice.

“By adapting to the changing landscape of digital commerce, the commission can ensure that competition remains robust and consumers are protected from anti-competitive practices,” he said.

Dr Mwemba said many digital platforms offer their services for free, leading to the perception that they do not generate significant revenue.

However, these platforms often collect valuable user data which can be used to gain a competitive advantage and limit the entry of new players.

To address these challenges, the CCC is proposing a shift in its approach to assessing digital mergers.

Instead of relying solely on financial thresholds, the commission will focus on the transactional value of the merger and the potential anti-competitive effects it may have.

This will allow the CCC to identify mergers that may not meet traditional financial thresholds but still pose a threat to competition.

He said the digital age has ushered in unprecedented changes, with technological advancements occurring at a dizzying pace.

“The emergence of artificial intelligence (AI) and other cutting-edge technologies has further complicated the regulatory landscape. Laws that were once sufficient to address traditional business practices may now be outdated or insufficient to deal with the challenges posed by digital mergers,” he said.

The CCC's decision to investigate digital mergers is driven by a recognition of the unique characteristics of such transactions.

Unlike traditional mergers, where financial thresholds often play a significant role, digital mergers can involve non-monetary factors such as data, user base, and market dominance.

This makes it challenging to apply traditional antitrust frameworks without considering the broader implications of these mergers.

In addition, the CCC is exploring the possibility of suspending certain regulations in exceptional circumstances.

“This would enable the commission to respond quickly to emerging threats and prevent harm to consumers. The COVID-19 pandemic has highlighted the need for flexibility in antitrust enforcement, as certain restrictions may be necessary to protect public health and safety,” said Dr Mwemba.

…..Shifting from "triple C" to "quadruple C"

The COMESA Competition Commission's (CCC) is set to place a greater emphasis on consumer protection with the CCC shifting from a Competition Commission to a Competition and Consumer Commission.

According to CCC Director and CEO Dr Willard Mwemba consumer protection was already incorporated into its mandate.

“We want to make the consumer issue come up pronounced. The CCC is not just a competition authority, so some of the amendments will be the move from the COMESA Competition Commission to a Competition and Consumer Commission,” said Dr Mwemba.

The CCCC aims to address a wider range of concerns and better serve the interests of consumers within the COMESA region.

By strengthening and pronouncing consumer protection, the revised competition law will help to create a more equitable and just market environment within the COMESA region.

It will also send a clear message to businesses that they must respect the rights of consumers and avoid engaging in anti-competitive practices.

According to Dr Mwemba, consumers should have the right to pay fair prices for goods and services, without being subject to excessive markups or discriminatory pricing practices.

They should be protected from unsafe or defective products that pose a risk to their health or safety.

“Consumers should have access to clear and accurate information about the products and services they purchase, including their quality, price, and terms and conditions,” said Dr Mwemba.

He further noted that consumers should be protected from unfair or abusive contract terms that may disadvantage them.

Consumers should have access to effective remedies if they suffer harm as a result of anti-competitive practices or unfair business conduct, which will be addressed through the pronunciation of the commission’s role in consumer protection

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