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Competition Commission offers leniency for cartel behaviour

2018-10-23  Edgar Brandt

Competition Commission offers leniency for cartel behaviour

WINDHOEK - In an effort to curb anti-competitive behaviour amongst Namibian companies, the Namibian Competition Commission (NaCC) yesterday launched its Corporate Leniency Programme (CLP). The CLP provides a framework for businesses engaged in cartel conduct to report themselves to the Commission and hand over evidence regarding cartel conduct in return for lenient treatment. 

According to NaCC’s Chief Executive Officer, Vitalis Ndalikokule, the CLP serves as an important tool in the fulfilment of the Commission’s mandate of promoting fair competition in the Namibian economy by investigating cartel conduct which has a harmful effect on both consumers and the economy.  

At yesterday’s launch, Ndalikokule stated that cartels harm consumers by raising prices and by restricting supply, thus making goods and services completely unavailable to some purchasers and unnecessarily expensive for others. Some of the cartel behaviour currently being investigated by the NaCC include exclusive agreements between short-term insurers and windscreen retailers as well as price fixing by local pharmacies. 

The CLP was published in the Government Gazette on October 12, 2018 and comes into effect immediately. By virtue of the launch of the CLP, Ndalikokule said the NaCC is already in the initial stages of processes that are in the near future expected to lead to the prosecution of various cartels in the local economy. The NaCC therefore urged cartel participants to make use of this opportunity and immediately remedy their participation in cartel activities by approaching the Commission through the CLP. 

“Cartels therefore raise prices above competitive levels and reduce output. Cartels also result in a situation whereby entities which seek to procure goods and services end up paying a lot more for such goods and services than they would have if there has been a competitive bidding process. In a nutshell, cartels shelter cartel participants from full exposure to market forces, thereby reducing pressure on such cartel participants to reduce costs and to innovate,” Ndalikokule explained. 

Usually conducted in secrecy, cartels are defined as agreements in terms of which businesses which are supposed to compete agree not to compete with each other. A cartel includes agreements between competitors in order to fix prices, engage in bid rigging, divide markets by allocating customers, suppliers, areas or specific types of goods or services and or limit or control production, market outlets or access, technical development or investment.  

Said Ndalikokule: “Cartels are often highly-secretive in nature and the detection and prosecution of cartels is often hampered by the absence of information from cartel participants in absence of a CLP. CLPs have internationally been proven as the most effective tool for the detection and prosecution of cartels. Internationally, the detection and prosecution of cartels in jurisdictions with CLPs has increased by virtue of the fact that the CLP encourages cartel members to come forward and self-report. This has led to the detection of more secretive cartels which operate without the knowledge of outsiders.”

He added that the NaCC has on a couple of occasions missed out on opportunities to uncover cartel activity as a result of informants as well as competition authorities from neighbouring jurisdictions who were hesitant to collaborate in providing information that would have assisted to expose cartel activity. 

“The introduction of the CLP in Namibia will thus help equip the Commission to more efficiently detect and prosecute cartels. The improved detection and prosecution of cartels will assist the Commission in ensuring that consumers are provided with competitive prices and product choices. The introduction of the CLP will also assist the Commission’s investigation processes by shortening the time spent on concluding cartel investigations and also assist to free up the Commission’s resources for more complex investigations,” said Ndalikokule.  

2018-10-23  Edgar Brandt

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