N$1m fine for unapproved merger
The Namibian Competition Commission has reached a N$1 million settlement agreement with Johannes !Gawaxab, Ismael Gei-Khoibeb and Gamma Investments CC (Gamma). This is after the Commission’s investigation found the parties contravened Chapter 4 of the Competition Act (No.2 of 2003) for implementing a merger without approval. As a result of the Commission’s findings, the parties agreed to settle the matter and entered into a settlement agreement with the Commission, wherein they would pay a pecuniary penalty in the amount of N$1 million and implement a compliance programme on Competition Law in Namibia.
“To that end, the settlement agreement entered between the parties and the Commission was made an order of court in the High Court on 30 April 2024 in the matter, Namibian Competition Commission v Johannes !Gawaxab, under High Court case number: HC-MD-CIVMOT-GEN-2024/00161.
“Having been made an order of court, the settlement agreement shall be in full and final settlement of the investigation, and shall conclude the proceedings by the Commission against the parties, pending compliance with the agreement and the order of court,” read a statement from the NaCC.
The statement added that the parties admitted to the Commission that on 10 June 2020, !Gawaxab sold his members’ interest in Gamma to Gei-Khoibeb, in contravention of competition legislation. The parties also admitted the transaction amounted to a merger in contravention of the Act, and was entered into without the prior approval of the Commission.
“The Commission wishes to encourage concerned stakeholders to ensure that they remain in compliance with the Competition Act, specifically Chapter 4. Where stakeholders are not sure whether the transactions they wish to pursue are notifiable or not, the Commission encourages such stakeholders to approach the Commission, and seek an advisory opinion before proceeding,” the NaCC stated.
The Commission’s investigation specifically determined the parties contravened section 44, read with sections 51 and 53 of the Competition Act.
In particular, the transaction amounted to a merger as defined and regulated in the Competition Act, as it resulted in Gei-Khoibeb acquiring the majority of the members’ interest in Gamma, as contemplated in terms of section 42(3)(f) of the Competition Act.
The NaCC also noted the merger in question fell within prescribed notification thresholds, and the parties failed to notify the Commission as required in terms of Section 44 of the Act.
“Merger regulation establishes a system of preventive control against increases in market power. This helps to predict the economic effects, and proactively regulate the structure of the economy to ensure that markets operate optimally. The focus is the protection of competition, such that a merger does not result in firms attaining market power which can potentially be abused through anti-competitive conducts, such as charging higher prices, changing service levels and changing product quality, among others,” NaCC’s spokesperson Dina //Gowases stated.
She added that all merger transactions meeting merger thresholds are required to be notified for assessment of possible market effects and clearance by the Namibian Competition Commission.
“This has the benefit of protecting consumers from potential abuses that can result from market dominance. Specifically, the merger assessments aim at ensuring that merging firms will not have the ability to raise prices, reduce quantity and/or quality and reduce the range of customer service postmerger,” //Gowases said.