• April 3rd, 2020

NaCC refuses Namcor 50% import mandate exemption

WINDHOEK – The Namibia Competition Commission (NaCC) has refused an application by the Namibia Petroleum Corporation (NAMCOR) to grant exemption for a proposed 50 percent import mandate for the country’s fuel needs. NAMCOR has applied to NaCC for exemption from the provisions of the Competition Act – in respect of agreements arising from a proposal decision by the Minister of Mines and Energy to require 50 percent of all petroleum imports to be reserved for NAMCOR. The exemption would have further required all fuel wholesalers in the country to purchase 50 percent of their fuel stock requirements from NAMCOR.  

“In light of the above, the Commission has in terms of Section 28(1)(b) of the Competition Act, made a determination to refuse to grant the exemption in respect of NAMCOR’s proposed 50 percent mandate,” read the NaCC’s statement issued on Friday by its Enforcement, Exemptions & Cartels Division. 
In terms of Section 27 of the Competition Act, the NaCC may grant an exemption if an agreement, decision or practice constitutes an infringement in terms of Chapter 3 of the Act. An exemption provides protection or immunity from enforcement action by the Commission, and precludes third parties from lodging a complaint in relation to exempted conduct.  

According to the statement, in arriving at its decision, it was prudent for NaCC to ensure any pro-competitive gains that may arise from the exemption would outweigh the anti-competitive effects thereof. 
“Consequently, it was imperative that before the Commission could grant the exemption, it was satisfied that there are exceptional and compelling reasons of public policy as to why the exemption was necessary. This is the test that is set out in the Competition Act,” read the statement. 

The Commission conducted a detailed assessment of the exemption application, which included consideration of the information provided by NAMCOR, conducting of consultations with relevant stakeholders, and consideration of international best practices in the petroleum and importation sectors and the applicable competition law principles. 

However, this assessment by the Commission revealed that agreements arising from the mandate would have anti-competitive implications; that Namcor had not disposed of its duty to show that the mandate, including agreements arising therefrom, offer efficiencies including whether consumers are offered a fair share of the resulting benefits (if any) that would result from the mandate,  and that the raising of barriers to entry arising from the mandate are likely to reduce the ability of small and medium enterprises (SMEs) to enter the market. 

The NaCC also determined that the mandate would impose restrictions that are not indispensable to the attainment of the objectives for which exemption is sought, such as less restrictive alternatives for achieving the objectives for which exemption was sought, and that the proposed mandate, including agreements arising therefrom would not be in line with established international best practice. The NaCC further noted there is no credible threat to security of supply that would warrant the mandate.  

During the initial application by Namcor, the NaCC pointed out that it is not the entity responsible for determining whether or not Namcor is entitled to the reinstatement of its 50 percent petroleum importation mandate, as this power is vested in the Minister of Mines and Energy in terms of the relevant legislation governing the petroleum industry.  

“The exemption application that is currently before the Commission is instead aimed at enabling the 
Commission to assess whether or not there are exceptional and compelling public policy justifications that would warrant the exemption of the reinstatement of the mandate from the provisions of the Competition Act,” read the NaCC statement at the time. 

Staff Reporter
2019-11-19 07:47:03 | 4 months ago

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