Introduction
This post highlights the need for robust regulatory frameworks that provide sufficient powers of enforcement for regulatory bodies. It draws lessons from the competition enforcement framework in Malawi, whose weaknesses were exposed in the Airtel Malawi v Competition and Fair Trading Commission of Malawi case. The blog examines the interplay between competition law and criminal law and how legislative frameworks should enable competition enforcers work collaboratively with public prosecutors in bringing about a conviction.
The link between competition law and criminal law
Competition Acts are employed in the enforcement of competition law where anticompetitive market conduct is investigated and prosecuted. In some instances, competition infringements may violate criminal law such as cartel conduct or price fixing - the so-called criminal provisions of a Competition Act. In such cases, the legislative framework needs to clearly demonstrate how competition enforcers work with public prosecutors (or whichever institutions are required to prosecute criminal violations) to bring about a conviction. Where this nexus is not examined, it takes one case to unravel the flaws in the legislative framework, allowing guilty parties escape the rule of law. In Malawi, the Competition Act provides that all infringements of the Competition Act are criminal offences and attract a fine. However, the Act does not give the Competition and Fair Trading Commission (CFTC) power to conduct criminal proceedings and to impose fines. Despite this, in competition enforcement, the CFTC has been issuing fines to errant enterprises. The complexities of this faulty legislative framework were brought to light in the Airtel Malawi vs CFTC case.
Case study: Airtel vs CFTC, High Court of Malawi
In 2021, the CFTC conducted investigations into Airtel’s change from automatic crediting of its customers’ accounts with bonuses to requiring that the customers claim the bonus, failing which, the bonus would be forfeited. The CFTC issued a decision on 27 August 2021, that Airtel’s conduct was unconscionable, contrary to Section (43) (1) (g) of the Act. The CFTC ordered Airtel to pay a fine of MK 2,113,099,660 (Approx. USD 2,000,000). Airtel lodged an appeal against the decision in the High Court of Malawi, challenging both the substance of the decision and the powers of the CFTC to impose a fine.
The High Court ruling
The High Court of Malawi dismissed Airtel’s grounds of appeal related to the merits of the decision. However, the court agreed with Airtel’s argument that the CFTC has no power to impose penal fines in the enforcement of the Act. The court noted that the decision of the CFTC against Airtel was founded in Sections 43(2) and 50 of the Act, provisions that criminalize a contravention of Section 43(1) specifically, and of the Act in general. The court also took note of Section 50 of the Act, which provides that contravention of the Act attracts a penalty of MK 500, 000, or an amount equivalent to the financial gain, if the amount is greater, and imprisonment for five years.
The court found that Section 51 presupposes the existence of criminal proceedings, and that the powers of the CFTC as enshrined under the Act do not include conducting criminal proceedings, convicting offenders, imposing fines, disgorging financial gains, or ordering imprisonment. These powers are ordinarily vested in the office of the Director of Public Prosecutions (DPP), who may delegate them where appropriate, but such delegation was not made to the CFTC. The court further noted that unlike other regulatory statutes, the CFTC does not provide for the alternative of imposing administrative fines. As such, the court concluded that there is no statutory basis for the CFTC to impose fines for contraventions of the Act, and that the CFTC had to refund the fine which Airtel had paid to the CFTC.
Implications of the High Court’s ruling
There is the need for law reform in competition enforcement frameworks in Africa. The decision exposes a wide lacuna in the enforcement framework of competition and fair-trading law in Malawi. The fact that Section 51 presupposes the existence of criminal proceedings, while the powers of the CFTC as enshrined under the Act do not include conducting criminal proceedings, reveals serious oversight by the drafters of the legislation regarding the implementation of the Act. Regulatory powers without the ability to enforce are a farce. Not only does this mean lack of power by the CFTC to enforce future decisions, but it also exposes the CFTC to possible lawsuits from enterprises that were fined in like fashion to Airtel, who may be claiming refunds of the sums paid to the CFTC pursuant to similar orders. The opening of this can of worms will likely impact the operations of the CFTC negatively.
Cross learning opportunities are available from other advanced competition authorities. In drafting competition law frameworks, there is no need to reinvent the wheel. Lessons can be learnt from African countries with more advanced competition legislation such as South Africa, which has devised a system of cooperation between its competition commission and the prosecutorial authority as far as enforcement of competition law using criminal law is concerned, particularly in relation to cartels.
There is the need to enhance the technical expertise of courts or legal institutions on competition issues. On a positive note, the CFTC is still left with the option of referring matters to the office of the Director of Public Prosecutions for prosecution of persons suspected to have contravened the Act. The challenge with this, however, is that the DPP and the court do not have specialization in competition and fair trading cases. Although this is the case, the DPP can benefit from prior investigations conducted by the CFTC regarding the conduct in question before referral to the DPP. It would also be beneficial to invest in building the capacity of the officers of the DPP as well as the judiciary in their knowledge of competition law.
Conclusion
The decision of the High Court of Malawi issued on 12 July 2023 reveals serious gaps in the enforcement framework of competition and fair trading law in Malawi. It demonstrates a lapse in drafting regulatory legislation and highlights the need for expeditious law reform in this area. It is important to note that though the Act is under review, Malawi’s competition and trade environment would remarkably benefit from the enactment of the draft legislation. This would give the CFTC much needed impactful regulatory powers. This case serves as a lesson for jurisdictions contemplating the introduction of competition legislation, to ensure that the law provides for avenues for enforcement by granting regulatory bodies sufficient powers to exact penalties when contraventions of the Act occur.
Author's bio
Lozindaba Mbvundula is an avid researcher, taking special interest in matters relating to international trade, regional integration and sustainable development. She is a Canon Collins scholar and a Mandela Washington Fellowship recipient. She has an LLM in International Trade Law and currently works as a Senior Associate at Ritz Attorneys at Law, a law firm in Malawi.
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