On 2 December 2019, major amendments to the Botswana competition regime were brought into effect. The implementation of the Competition Act 2018 will lead to businesses operating in Botswana facing a heightened level of risk due to tougher sanctions being applicable. Most notably, these reforms introduce criminal sanctions for officers and directors of companies engaging in cartel conduct as well as financial penalties for the failure to notify and pre-implementation of notifiable mergers (gun jumping).
A competition regime was introduced in Botswana with the adoption of the Competition Act 2009. The regime has, in international terms, been robustly enforced by the Competition Authority (the competition authority in Botswana). While the Competition Authority has taken a range of enforcement action (in particular, in relation to public procurement), it has faced material procedural challenges. Such challenges have included the allegation that the institutional set-up of the regime is contrary to the rights to a fair hearing as the Competition Commission, the adjudicative body, is not sufficiently independent from the Competition Authority.
The Competition Act 2018 signifies the first major revision of the Botswana competition regime. While the Competition Act 2018 had received presidential assent in March 2018, the commencement date had until now not been announced. These reforms are designed to address the procedural challenges raised to date, to fix shortcomings in the scope of the Competition Act (such as the lack of financial sanctions for gun jumping) as well as to modernise the Botswana regime relative to international trends (such as the increased criminalisation of cartel conduct).
As one of the more notable changes arising from the Competition Act 2018, any officer or director of a company engaging in cartel conduct (price-fixing, market allocation or bid-rigging) is now liable for a fine up to BWP 100,000 (approx. USD 9,000) and/or imprisonment for up to 5 years. Unlike other jurisdictions with individual criminal liability, there is no explicit requirement for the officer / director to have personally participated in the conduct or to have failed to prevent such conduct once it was within their knowledge.
As part of other amendments arising from the Competition Act 2018, any officer or director of a company engaging in minimum resale price maintenance (RPM) is liable for a fine of up to BWP 50,000 (approx. USD 4,500). Although it is relatively unusual in other jurisdictions that individual liability is extended to RPM, certain regimes (such as Australia) provide for personal liability.
In addition, Competition Act 2018 introduces financial penalties for gun jumping of up to 10% of the consideration for the transaction or the parties’ combined turnover (whichever is greater). While the Competition Authority previously had the power to unwind implemented transactions, no financial sanctions could be imposed. As the base amount of the fines is not explicitly limited to the value of the transaction or of turnover relating to Botswana, the application of any penalties to foreign-to-foreign mergers will need to be carefully considered.
In terms of the institutional aspects of the Botswana competition regime, the Competition Authority is renamed as the Competition and Consumer Authority (CCA) and a separate body, the Competition and Consumer Board, will govern and direct the affairs of the CCA as a successor to the Competition Commission. Due to the separate implementation of the Consumer Protection Act 2018, the CCA will also now have a consumer protection mandate.
Meanwhile, the adjudicative functions of the Competition Commission have been transferred to a newly established Competition and Consumer Tribunal (the Tribunal). As a consequence, similar to the bifurcated enforcement model in South Africa, the CCA will now need to refer infringements to the Tribunal for adjudication.
The implementation of the Competition Act 2018 presents a mixed bag for businesses operating or investing in Botswana. On the one hand, the proactive manner in which concerns relating to the right to a fair hearing have been addressed is welcome and should arguably be followed by other African regimes. However, on the other hand, the introduction of individual liability for not only cartel conduct but also RPM materially increases the complexity and risks arising from the Botswana competition regime.
The author would like to thank James Donald for his assistance with this blog.