Botswana com­pe­ti­tion law penal­ties re­vised

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - JA­SON VAN DIJK & JAY PAGE

BOTSWANA’s guide­lines on fines, pub­lished in late Jan­uary, sig­nal that its Com­pe­ti­tion Com­mis­sion means busi­ness and will im­pose se­ri­ous fines for com­pe­ti­tion law vi­o­la­tions. The guide­lines are in­tended to make the cal­cu­la­tion of penal­ties by the reg­u­la­tor and by par­ties charged with anti-com­pet­i­tive con­duct more trans­par­ent and pre­dictable, but it re­mains to be seen whether that will be achieved.

The com­mis­sion must con­sider the na­ture, du­ra­tion, grav­ity and ex­tent of the con­tra­ven­tion; any loss or dam­age suf­fered as a re­sult of the con­duct ( in par­tic­u­lar by con­sumers); the mar­ket cir­cum­stances in which the con­tra­ven­tion took place; the level of profit de­rived from the con­tra­ven­tion; what amount would serve as an ad­e­quate de­ter­rent (to both the guilty firm and other en­ter­prises) while re­main­ing pro­por­tion­ate to the in­fringe­ment; whether the prod­uct is an es­sen­tial good, and whether the firm has pre­vi­ously con­tra­vened the Com­pe­ti­tion Act.

Other fac­tors which may be taken into ac­count in­clude the de­gree of co­op­er­a­tion with the Com­pe­ti­tion Author­ity and whether the firm ap­plied for le­niency.

Un­like in SA, the Botswana com­mis­sion will take into ac­count whether a com­pany is ac­tu­ally ca­pa­ble of paying the fine and whether levy­ing too hefty a fine might lead to the en­ter­prise shut- ting down or be­com­ing in­sol­vent.

The Botswana guide­lines set out both ag­gra­vat­ing and mit­i­gat­ing cir­cum­stances that may re­sult in a higher or lower penalty be­ing im­posed.

Th­ese in­clude the involvement of se­nior man­agers and direc­tors in the pro­hib­ited con­duct; whether an in­fringe­ment was in­ten­tional, rather than neg­li­gent; en­gage­ment in co­er­cive or re­tal­ia­tory mea­sures against a le­niency ap­pli­cant or other en­ter­prises to con­tinue with the in­fringe­ment; con­tin­u­a­tion of the in­fringe­ment af­ter the Com­pe­ti­tion Author­ity com­menced the in­ves­ti­ga­tions and act­ing as a ring­leader or in­sti­ga­tor of the in­fring­ing con­duct. Cir­cum­stances that may re­sult in a lower fine be­ing im­posed in­clude that the firm acted un­der se­vere duress or pres­sure; was gen­uinely un­cer­tain whether the agree­ment or con­duct was pro­hib­ited; took ad­e­quate steps to en­sure com­pli­ance with the Botswana Com­pe­ti­tion Act and ter­mi­nated the in­fringe­ment as soon as the Com­pe­ti­tion Author­ity in­ter­vened.

A bal­ance needs to be struck be­tween the need to de­ter anti-com­pet­i­tive con­duct against the rights of com­pa­nies to re­ceive a fair and pro­por­tion­ate penalty.

In prac­tice, the Botswana com­mis­sion is likely to con­sider all of the fac­tors which must be taken into ac­count and then to take any ag­gra­vat­ing and mit­i­gat­ing cir­cum­stances into ac­count as well.

Th­ese fac­tors are very sim­i­lar to the fac­tors con­tained in SA’s Com­pe­ti­tion Act and the ap­proach adopted by the South African com­pe­ti­tion au­thor­i­ties when de­ter­min­ing the ap­pro­pri­ate penal­ties.

As in SA, Botswana’s Com­pe­ti­tion Act caps an ad­min­is­tra­tive penalty at 10% of the guilty firm’s turnover. In SA, a penalty can only be im­posed on a firm’s turnover gen­er­ated in one year. How­ever in Botswana, the com­mis­sion is em­pow­ered to fine a guilty firm based on its turnover gen­er­ated over the en­tire pe­riod that it was en­gaged in the pro­hib­ited prac­tice, up to a max­i­mum of three years.

The Botswana Com­pe­ti­tion Com­mis­sion clearly means busi­ness. Although it has not im­posed any penal­ties for anti-com­pet­i­tive con­duct to date, any busi­ness trad­ing in or into Botswana must take steps to com­ply with Botswana’s Com­pe­ti­tion Act, to avoid po­ten­tially sig­nif­i­cant penal­ties.

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