A reign of cartels
The Guardian, Nigeria, April 28, 2010
needs competition law
Next, Nigeria, April 15, 2010
A reign of cartels
The Guardian, Nigeria, April 28, 2010
The Nigerian economy is one of the few in the world that
encourages cartels to hold the consumers and even regulators
hostage. Six times in the last eight years, the nation has
attempted to enact bills to free the market of cartels but
six times the efforts failed. The economy and the consumers
are the worse for it, reports EMEKA ANUFORO of our Abuja
United Nations Conference on Trade and Development (UNCTAD)
maintains that competition is the main driver for building
competitiveness, innovation, technological advancement and
economic development in the long-run and that the promotion
of competition should remain as a policy tool, irrespective
of a country's position in the business cycle.
Nigeria, the Federal Government is yet to adopt a
competition law for the country. Efforts have been made on
several occasions to adopt legislation with the development
of six versions of draft competition bills, but such have
never been successful.
times the country tried, six times the efforts failed for
reasons no one can put a finger to. Experts reason that the
sooner Nigeria understands the importance and benefit of a
good competition regime, the better it would be for us all:
Business entities and everybody else in society.
Currently, there seems to be lack of consensus among
different segments within the government about the need for
a competition law for the country, and the situation of the
Experts list some of the existing anti-competitive practices
in the Nigeria economy as:
Allegation of cartel in the cement industry;
Tariff fixing and other charges;
Cartel in the mobile telecommunications industry;
Possible cartel in the downstream petroleum sector;
Price fixing and entry barrier by trade associations;
Opportunity for bid rigging in government procurement
Tied selling in soft drink industry.
Globally, the enactment of competition law and policies has
become a major development tool, which is used by countries
regardless of their level of development.
International Network of Civil Society Organisations on
Competition (INCSOC) is one of the international groups in
the forefront of the advocacy for an effective regulatory
body for competition in countries.
recent publication from the body notes that independent
regulatory bodies are essential to breaking the activities
of cartels in the larger interest of the citizenry.
publication notes: "In the absence of any international
enforcement in the field of competition law, states need to
cooperate in order to adequately respond to the most
egregious international anti-competitive practices. The
establishment of an international competition fund would
fill the current legal and institutional vacuum and become
an elegant means to redress the adverse effects of cartels.
"Cartels harm consumers in both developing and developed
countries because of their upward impact on prices and they
also provide the luxury of being inefficient. Thus
cartel-busting is often the most important activity of
competition authorities around the world, because of
resource constraints and lack of experience.
"Although no calculation of the harm of all cartels is
possible given their secret nature, a fraction of exposed
international cartels running into billions makes it clear
that cartels are a major and invisible drain on world's
economy. Nevertheless, the impact on developing countries of
cartels can be easily illustrated by data obtained from only
six cartels. They generated to developing countries the
overcharges of $1.71 billion, $67 million, $8 million, $1.19
billion, $975 million and $43 million from collusions in the
vitamins, citric acid, bromine, seamless steel tubes,
graphite electrodes and lysine industries, respectively."
According to the document, "in recent times, record fines of
more than $500 million have been levied by the UK and U.S.
competition authorities on British Airways (BA) for
cartelization with Virgin on its transatlantic flights. The
fines levied on the airlines will be credited to the
treasuries in the U.S. and UK and only affected citizens who
have filed private action suits against the said airlines
will be compensated through damages. However, affected
consumers from developing world will not be able to claim
any compensation. Given the global impact of such cartels,
it is surely only fair and fitting that a portion of these
fines be used for strengthening institutions that enforce
competition and deter cartels in the developing world".
setting up a relationship between consumer protection,
competition and competitiveness and development, India-based
Cuts International's Centre for Competition, Investment and
Economic Regulation (CUTS C-CIER) notes that, "competition
policy promotes efficient allocation and utilisation of
resources, which are usually scarce in developing countries.
This also means more output, lower prices and consumer
welfare. It does not stop there, only as more output is also
likely to lead to more employment in the economy."
good competition policy and law lower the entry barriers in
he market and make the environment conducive to promoting
entrepreneurship and growth of small and medium enterprises.
This has positive implications for development as small
business and entrepreneurial activities promote employment
Consumer protection policy is part of the strategy that
emanates from fulfilling the minimum basic needs of the
people, removing the sources of poverty and marginalisation,
focusing on problems like unemployment, basic health
services and so on, while competition law policy is an
integral part of the latest technologies, exports,
industrialisation, more competition to provide choice and so
on. At the core of this lies enhancement and maintenance of
Competition policy has a significant role to play in
promoting competitiveness and growth. Experts are
increasingly concerned that besides seemingly weak
sector-specific laws on competition in Nigeria, efforts to
have a competition law for Nigeria has failed.
Previous efforts are chronicled below. None has been given a
Draft Bill 1:
Federal Competition Bill 2002 - A bill for an Act to set-up
federal competition. To provide the necessary conditions for
market competition and to stimulate creative business
activities, protect consumers, and promote the balanced
development of the national economy by prohibiting
restrictive contracts and business practices that
substantially lessen competition and regulating the abuse of
dominant positions of market power and anticompetitive
business combines, and to establish the Federal Competition
Commission for the effective implementation and enforcement
of this bill and for matters connected therewith. This is in
an Executive Bill sponsored by the Federal Government
through the Bureau of Public Enterprises (BPE). This draft
bill was presented as an executive bill to the Senate in
Draft Bill 2:
National Anti-trust (Prohibitions, enforcement, etc) Bill
2004: An act to regulate and prohibit unfair competition and
unreasonable combinations in restraint of commerce, industry
and trade, including monopolies, trusts and interlocking
directorates, for the purposes of maintaining and
strengthening the free enterprise system, ensuring
unrestrained competition, and establishing a level playing
field, in business in the federation, and to make provision
for other matters relating thereto. This bill was sponsored
by Hon. Halims Agoda and others and presented to the House
of Representatives in 2004.
Draft Bill 3:
Competition (Anti-trust) Bill 2007-sponosred by Hon. C. I. D
Maduabum. Presented to the House of Representatives in 2007.
First reading was on September 5, 2007. No second reading
Draft Bill 4:
Nigerian Trade and Competition Commission Bill 2008 - The
bill was sponsored by Senator Joel Ikenya. First read on
November 6, 2008. Referred to Joint Committee on
establishment and Public Service matters, Judiciary, Human
Rights and Legal matters, and Commerce.
Draft Bill 5:
Nigerian Anti-trust (enforcement, miscellaneous provisions,
etc), 2008 - A bill for an Act to prohibit monopolies to
trade, commerce or industry, to regulate the business
activities of companies and trust with regard to restraints
in trade or commerce, to establish the anti-trust division
for the purposes of enforcing the provisions thereof and to
foster the sustenance and development of a free market
system, and secure the practice of a fair and open market
system, etc. The bill was sponsored by senators Heineken
Lokpobiri and F. K. Bajomo and was first read on April 23,
2008. It was never read a second time.
Draft Bill 6:
Competition and Consumer Protection Bill 2009. On April 22,
2009, President Umaru Musa Yar'Adua presented before the
Federal Executive Council (FEC) a bill that seeks to promote
the welfare and interests of consumers and provide them with
competitive prices and choices. It also seeks to regulate
monopolies, merger and acquisitions and all forms of
business combinations and prohibit restrictive business
practices, which prevent, restrict or distort competition or
constitute the abuse of a dominant player in the market.
pproval of the bill was differed till another date to enable
council members sort-out grey areas in the bill and for
proper harmonisation with the existing sector-specific
national training workshop on competition policy in Abuja
penultimate week, the general Coordinator of Consumers
Empowerment Organisation of Nigerian (CEON), Mr. Adedeji
Babatunde identified political economy constraints in
implementing competition regimes. Some of these, he listed
as lack f consensus amongst the relevant government
ministries, departments and agencies on the competition
commission; low awareness of benefit of competition law for
the country in the political circle; possible hostility from
large business (state monopolies that were privatised, at
the beginning of the privatisation process, which are weary
that the competition law is designed to weaken their
position in the sectoral markets.
the interface between competition and sector regulation, he
added: "The interface issue has not been adequately treated
in the draft competition and consumers protection bill
2009.When the Act comes into force, it should enable proper
consultation and cooperation between the competition agency
and the sectoral regulators for the promotion of competition
in specific sectors.
need for cooperation between these sectoral regulators and
the competition commission is particularly necessary, given
that most of the sector regulators have also been entrusted
(as par provisions in their respective sectoral
legislations), with the function of promoting competition in
the sectoral markets) especially in securities, telecoms and
According to him, "confusion and inter-agency turf issues
may emerge, if the modus operandi of such cooperation
/coordination is not addressed in the real final version of
the competition law."
Programme officer, Trade and Competition at the Economic
Community of West African States, Dr. Sacko Seydou is of the
view that for Nigeria to attain its target of becoming one
of the 20 industrialised nations of the world by the year
2020, (Vision 20:2020) the country needs to create
confidence in the minds of local and foreign investors by
passing its competition law.
Speaking recently, Seydou observed that where there is no
competition law, it is difficult to have functional
investments and good consumer protection.
According to him, there is no way the nation could achieve
Vision 20:2020 without attracting investors into its
said: "Competition policy and competition laws are generally
conducive to both foreign direct investment and local
investment, given their role in improving transparency in
the regulatory system.
"Investment is generally a gamble about future outcomes.
Hence investors would prefer to have an opportunity to
predict the future outcome of their investment. Transparency
in the implementation of regulations having an impact on
investment is a critical determinant in investment
stressed that competition laws that are transparent and
characterized by predictable implementation and consistent
rulings on competition cases on the basis of
non-discriminatory, could remove the uncertainty surrounding
Babatunde regretted that the consumer bill at the National
Assembly has not been passed mostly because the lawmakers do
not understand the issues around competition laws.
result, he added, consumers suffer harsh treatment in the
hands of producers and providers of goods and services.
Experts who attended the national training regretted that
there is lack of understanding and awareness in the
political circle on the benefit for the economy from a
therefore, urged that advocacy efforts towards adoption of a
competition law should articulate the pro-poor objectives of
competition legislation upfront, especially for sensitizing
Unfortunately, in all the countries were the regional
training on competition policy and law was held, it is only
in Nigeria that the organisers had challenges getting
members of the National Assembly to participate.
Cartels have free reign in the production and distribution
chain of consumer goods in the country
Commerce and Industry Minister, Senator Jubril Martins
Senate President David Mark
House of Representative Speaker Dimeji Bankole
news item can also be viewed at:
needs competition law
Next, Nigeria, April 15, 2010
lack of competition law is leaving Nigerian consumers
vulnerable to unhealthy competition, the Consumer
Empowerment Organisation of Nigeria (CEON) has said.
Babatunde Adedeji, Coordinator General of CEON, said
yesterday in Abuja at a National Training Workshop on
Competition Policy and Law that without a policy to
checkmate the activities of business owners who impose high
prices for goods and services, the predator-prey
relationship between consumers and suppliers will continue.
is natural for firms to compete," said Mr. Adedeji, "but in
some situation, the rivalry is undermined, so there is need
to protect consumers. There have been series of initiatives
and efforts towards putting in place an effective
competition regime in Nigeria. Some of these initiatives and
efforts are the various bills on competition and anti-trust
at National Assembly and the Draft Federal Competition
Bill/National Competition and Consumer Protection Bill of
the Federal Executive Council."
Benefits of the
Mr. Adedeji said that
when the competition law is in place it will promote
efficient allocation and utilisation of resources, which are
usually scarce in developing countries. This also means more
output, lower prices and consumer welfare. Though
competition will most likely lead to some job losses in some
sectors in the short run, but this can be taken care of by
having an appropriate social safety net in place.
"A good competition
policy and law lowers entry barriers in the market and makes
the environment conducive to promoting entrepreneurship and
growth of small and medium scale enterprises."
He called for an end
to the arbitrary abuse of the Nigerian market by some
operators which has continued to exist because of absence of
political will by government to enact competition policy and
According to the CEON
coordinator general, efforts by government to adopt such
legislation in the past have culminated in the development
of six different draft competition bills that are yet to be
translated into relevant competition laws.
The bills, if passed,
will provide the necessary conditions for market
competition, stimulate creative business activities, protect
consumers and promote the balanced development of the
economy, said Mr. Adedeji.
One bill which has
never been accorded serious consideration by the parliament
is the 2002 federal competition bill for an act to set up a
federal competition commission.
"The bill was also to
prohibit restrictive contract and business practices that
substantially lessen competition and regulate the abuse of
dominant position of market power and anticompetitive
Another bill which
was sponsored by the federal government through the Bureau
of Public Enterprise (BPE) was presented as an executive
bill to the Nigerian Senate in 2002. However, there have
been no further actions on the bill since its presentation
In 2008, a bill
sponsored by Joel Ikenya, a senator at the time, was
presented for an act to provide for the establishment of the
Nigerian trade and competition commission.
The bill passed
through its first reading in April 23, 2008, a second
reading on November 6, 2008, and was then referred to joint
committees on establishment and public service matters,
judiciary, human rights and legal matters and commerce.
According to Mr.
Adedeji, the bill was able to move so far because Mr. Ikenya
was the Senate Committee Chairman on Commerce at the time.
However, the bill has since stalled at the joint committee
Another bill was the
National Antitrust Bill drafted in 2000 as an act to
regulate and prohibit unfair competition and unreasonable
combinations in restraint of commerce, industry and trade.
Mr. Adedeji said the
bill would have prohibited monopolies, regulated mergers and
acquisitions, and policed all forms of business practices
which constitute the abuse of a dominant player in the
market. It would also have promoted the welfare and interest
of consumers and provide them with competitive prices and