Following its Resale Price Maintenance Amnesty last year, the Competition Commission in Mauritius has initiated a leniency programme which has been extended to cartel initiators or coercers.
How does the Leniency Programme work?
Under the Competition Act 2007 (“the Act”), enterprises which have participated in collusive agreements are liable to financial penalties namely under section 59. We note that there is no definition per se of cartel in our law but understand that cartels will consist of those enterprises which participate in collusive agreements. The European Union defines a cartel as “a group of similar, independent companies which join together to fix prices, to limit production or to share markets or customers between them. Instead of competing with each other, cartel members rely on each other’s' agreed course of action, which reduces their incentives to provide new or better products and services at competitive prices. As a consequence, their clients (consumers or other businesses) end up paying more for less quality.” The Competition Commission may impose fines of up to 10% of the turnover of an enterprise covering the duration of the illegal agreement and this can only be for a maximum of 5 years. It should be noted that section 59 also makes provision for leniency in relation to the fines to be applied by the Competition Commission and the Leniency Programme is set up under this section.
The Guidelines (CCM3-Collusive Agreements) issued by the Competition Commission in November 2009 and amended in December 2017 previously stated that the Commission would grant an enterprise the benefit of total immunity where the enterprise was the first to come forward to the Commission with evidence of the cartel activity and co-operates with the Commission throughout the latter’s investigation of this illegal activity exceptwhere the enterprise initiated the cartel or actively forced other enterprises into participating in the cartel.
The Leniency Programme seeks to now provide cartel initiators with 50% reduction in financial penalty if it provides the Commission with evidence of the cartel activity before the commencement of an investigation (and up to 50% if it comes forward after the commencement of such an investigation). We note equally that the reduction in financial penalty is at the discretion of the Commission which will also take into consideration certain factors such as the stage at which the enterprise has come forward, the evidence already in the CCM’s possession and the quality of the information provided by the enterprise.
What is a collusive agreement?
Collusive agreements are considered to be the most serious breaches of the Act as they can directly restrict competition. We also note that the Competition is not allowed much discretion in regards to the interpretation of the corresponding provisions in the Act as to collusive practices. Therefore enterprises are urged to constantly review their practices from a legal perspective to ascertain whether they are unwittingly party to a collusive agreement.
Examples will include agreements to limit technical development, agreements to share markets for goods or services by territory, type or size of customer, fixing of prices by allowing discounts or charges, agreements to fix production levels or even bid-rigging.
These types of agreements will be considered collusive if they “significantly prevent, restrict or distort competition.” Moreover the definition of what constitutes an agreement under the Act is broad. It does also extends to verbal agreements and concerted practices.
Please note that this list is not exhaustive and each agreement will have to be assessed on a case to case basis.
What constitutes a “cartel initiator”?
As per the guidance provided by the Competition Commission, a cartel initiator (also sometimes referred to as instigator) is “the enterprise which has initiated collusive collaboration for example by making first contact with other enterprise(s) with the view to implement the cartel.” In short, the cartel initiator has taken a leading role to come up with the collusive agreement.
The coercer on the other hand is an enterprise which has taken forceful steps to coerce other enterprises in participating in the cartel and which has made use of threats and retaliatory measures to ensure that the other enterprises keep delving into the harmful practices.
Having a dedicated practice to Competition Law, Juristconsult Chambers is well versed in the latter. We have advised a number of clients in relation to the recent Resale Price Maintenance Amnesty. We understand the complexity of this area and we are quick to identify any practice that may cause concern from a regulatory point of view. We have moreover assisted clients with their application in relation to the above mentioned Amnesty and we have expertise in dealing with the Competition Commission effectively.
We would be pleased to assist in any matter pertaining to the above or in relation to Competition Law generally.