Businesses need to understand this concept, as the penalties for deliberately or negligently concluding a collusive agreement can be severe. An ‘agreement’ need not be written down, or 100% effective, to be in breach of the Act. A conversation between competitors that results in some common understanding to raise (or not reduce) prices would be a collusive agreement, for example. Any communication between compettiors that makes it easier not to compete could be a collusive agreement. A business could be liable to penalties for a collusive agreement even if the most senior management were not aware of any collusion, for example, because individual salesmen from two or more companies agreed to share out the markets. Businesses should be very careful about communications with competing businesses and should also be careful when attending events – such as industry association meetings – that may bring competitors together. The law in this area has changed in Mauritius, and many practices that have been in place for years may now be prohibited. It is the responsibility of every business to understand its obligations under the Competition Act 2007.
Non-collusive agreements as set out in Sections 44 and 45 of the Act, are agreements that have the object or effect of restricting, preventing or distorting competition but are not themselves collusive agreements (such as price-fixing agreements). Essentially, the Competition Commission would investigate such agreements between a group of companies if they had similar effects to actions by a monopolist to restrict, prevent or distort competition. For example, an agreement that has the effect of making new entry difficult could be a non-collusive agreement. The Competition Commission regards this area of ther law as being very similar in scope to monopoly situations, and deals with non-collusive agreements in its Guidelines on Monopoly Situations. Like monopoly situations, no financial penalties can be imposed for a breach, although the Commissioners can impose remedies to restore competition.
In order to obtain information to successfully break open cartels, the Competition Commission offers reduced penalties or even total immunity from financial penalties to participants in a cartel who come forward with information. Complete immunity is available only to those coming forward first, and subsequent applicants may get no reduction at all. If you are involved in a cartel it is therefore strongly in your interests to inform the Competition Commission, in confidence, before your competitiors do. Further information is available in the Competition Commission Guidelines on Collusive Agreements.
No. Mauritian competition law does not require companies to seek the competition authority’s approval. Businesses may merge, subject to meeting any other legal requirements, without involving the Competition Commission at all. However, the Competition Commission does have the power to review mergers in some circumstances (see Sections 47 and 48 of the Act) and the Commissioners can take action if they find that the merger results, or is likely to result, in a Substantial Lessening of Competition (see Section 61). This includes the power to require divestments and possibly even a full unwinding of the merger if need be. Consequently, businesses considering a merger would be well advised to seek the Competition Commission’s advice and possibly even undergo an investigation before going ahead with the merger, to avoid the costs of subsequently having to reverse it. Businesses proceeding with a merger without informing the Competition Commission do so at their own risk.
Yes, they do, and the Act is constructed to recognise this. Being large, being in a ‘monopoly situation’ is not a breach of the Act. Only behaviour that restricts, prevents or distorts competition (or otherwise exploits the situation) is a breach. Mergers to achieve economies of scale might be approved by the Competition Commission, even if they result in a loss of competition, by considering whether the merger results in ‘offsetting benefits’ under Section 50 of the Act. The Competition Commission Guidelines on Remedies and Penalties provide details.
A financial penalty of 10% of turnover seems very high.
The 10% figure is a maximum limit not a standard but yes, it is high, to reflect the seriousness of the behaviour it seeks to deter: deliberate agreements between competitors not to compete. Unlike some countries, in Mauritius financial penalties cannot be levied for monopoly abuse, only for collusive agreements (price ficing and other cartels). Furthermore, the Commission can only impose penalties for a deliberate or negligent breach of the prohibition on collusive agreeements. Thus, a business cannot accidently expose itself to liability for a fine. Businesses which do not communicate with their competitors to fix prices or share out markets have no need to be concerned about these penalties.
The 30% figure is not a trigger for action. Being in a monopoly situation as defined in the Act is not a breach. The Competition Commission can only investigate if it believes there may be abuse of a monopoly, and can only act if it finds such abuse. There is no presumption whatsoever that a business with a market share in excess of 30% is in breach. The point of the 30% figure is to define a level below which the Competition Commission cannot investigate, not a threshold above which it will investigate. In competition policy, this is often referred to as a ‘safe harbour’. Many jurisdictions have no safe harbour at all, thus the equivalent figure in competition legislation elsewhere is zero. In Mauritius, unlike some other jurisdictions, financial penalties cannot be imposed on companies found to be abusing a monopoly situation, although the Commission does have strong remedial powers.
Yes and no. If parastatals behave in a way that restricts, prevents or distorts competition they can be investigated just like any other business. More generally, when Government behaves as a business (for example, when buying products or services) it is subject to the Act. But we cannot overturn policy decisions, or even investigate them as restrictive practices. If Government decides as a matter of policy to restrict competition in an industry (for the purpose of other policy goals, for example, like protection of Mauritian farmers) then the Competition Commission cannot act (although it can advise the Government). This applies to all state bodies, so for example the Competition Commission cannot overturn a regulator’s decision not to give a company a licence. It is simply outside the scope of the Competition Act. Our Guidelines document number 7, General Provisions, provides more information.
Yes. In general we will assume complainants will prefer their identities not to be revealed. We must be made aware of a complainants’ identity, however, We will not take any action on a tip-off that comes to us without a named source.
Yes, throughout the process. The Competition Commission is required by the Competition Act to carry out its investigations with due regard for fairness and natural justice. We will inform you of the investigation and the nature of the concern right at the start of the investigation. We will publish a timetable for the main stages of the investigation for you, and the public, to see. We will meet you to discuss the issues, and we are always open to considering any views you want to put to us, in person or in writing. We will inform you of our evolving views as the case develops, sending a statement of issues when we have gathered enough information to set out our concerns in detail, and sending you a draft version of the final report. You will be invited to comment on these documents, and to submit your own side of the story for inclusion in the report, if you would like to do so. Once the Executive Director’s report has been submitted to the Commissioners, you will have an opportunity for a hearing in front of the Commissioners. Throughout, our intention is that you should be as informed as possible about the developing case, so that you have the opportunity to make your case and also because it provides us with an opportunity to check facts and test arguments.
The Competition Commission can only use its powers of investigation when it suspects a breach of the Competition Act. Many things may be damaging to consumers or businesses that are not breaches of this Act. For example, fraud or breach of contract. These may well be in breach of the law, but as they are not specifically breaches of the Competition Act, the Competition Commission has no powers to get involved. But we welcome all information, even if occasionally we have to respond by saying that the behaviour is outside the scope of our own powers.
The Act provides the Executive Director (and staff) at the Competition Commission with very strong investigatory powers. When we are investigating a possible breach of the Act, we can for example compel the production of documents and other information, compel attendance at interview, administer oaths and – in some circumstances and after applying for a warrant – raid premises and seize evidence. Normally, we do not need to use these formal powers, as parties co-operate with our investigations. All of these powers, however, are available only for a specific investigation, when the Executive Director has reasonable grounds to believe that a breach of the Act may be taking place. At any time, the Competition Commission will have a number of investigations ongoing. However, outside these specific, formal and usually public investigations, it has no powers of compulsion. When carrying out more general enquiries, therefore, we depend on information supplied voluntarily or information in the public domain.
Like competition law elsewhere, the Competition Act prohibits businesses from restricting, preventing or distorting competition. Generally, the Competition Commission can get involved if (a) competing businesses agree on prices or otherwise arrange between themselves not to compete, (b) one or more large businesses (monopoly) squeezes competitors out of the market, prevents entry or otherwise uses its position to make it difficult for competitors or (3) competing businesses merge together. The Competition Commission has to act strictly within the law and cannot use its powers of investigation except where there are reasonable grounds to believe that a breach such as this is occurring.
The Competition Commission has set out its approach to assessing competition in a set of seven Guidelines documents, all available here.
We have a policy of announcing all investigations in public. We might temporarily keep an investigation quiet if we are expecting to raid company premises to seize documents, as this obviously requires that our visit should come as a surprise. But that is the only circumstance in which we would usually not publicise the investigation, and of course once any such raids have taken place (or we have decided we do not need them), the investigation will be made public.
I have heard that the Competition Commission is asking questions about my business. Am I under investigation?
Almost certainly not. When the Competition Commission launches a formal investigation, it will almost always publicise the fact. To launch an investigation, the Executive Director needs to have ‘reasonable grounds’ to believe there may be a competition problem. To satisfy this condition, we need to ask questions and find public information about all sorts of industries, all the time. The great majority of these informal enquiries do not result in investigations.
Yes. Any person affected by an order of the Commission can appeal to the Supreme Court, under Section 67 of the Competition Act.
Why is there no independent appeal tribunal as in South Africa?
The Competition Act 2007 establishes a single authority, the Competition Commission. This represents a change from the Competition Act 2003 (which never came fully into effect), which established a Tribunal. This decision of Government represented a desire for a simpler, less cumbersome and less costly system in what is, after all, a relatively small economy. However, the Act imposes a clear separation of powers between the Executive Director (and his staff) on the one hand, and the Commissioners on the other. The Commisisoners are not involved in any case until the Executive Director reports to them, and at that point parties under investigation have a right to a hearing with the Commissioners. Thus, they do provide a fresh look at the case. Only the Commissioners can take any action, such as imposing penalties and remedies, and even then there is a right of appeal to the Supreme Court. Thus, there are significant checks and balances, within the system, even without a separate appeals body.