28 November 2012

Mozambique: Assembly Passes Bill On Competition

Maputo — The Mozambican parliament, the Assembly of the Republic, on Thursday passed unanimously the first reading of a government bill on regulating competition.

The bill outlaws anti-competitive practices. Thus companies are forbidden to form price-fixing rings, or take other measures that “hinder, falsify or restrict competition in all or part of the national market”.

Companies operating in the same type of business may not, for example, share out clients, suppliers or territory between them, and they may not limit or hinder access of new companies to the market. They may not agree among themselves in order to obtain advantages or influence the outcome of public tenders for the supply of goods or services.

Companies must not, without good cause, refuse to sell their goods or services, and must not make commercial relations dependent on the acceptance of unjustifiable or anti-competitive clauses and conditions.

They must not make the purchase of one item dependent on buying another.

Companies that enjoy a dominant position in the market must not abuse it, by taking measures that hinder potential competitors. They must not oblige their suppliers or consumers not to enter into normal trade relations with competitors.

Dumping is also banned – companies may not unjustifiably sell or import goods at below cost price.

A regulatory body (not yet named) will enforce respect for the rules of competition. The bill states that this will be an independent and impartial body, whose members cannot be sacked before their term of office expires.

However, the bill does not state exactly how this regulatory body is to be formed. Parliamentary deputies from the ruling Frelimo Party urged that it should contain representatives of private business and of NGOs that defend consumers’ rights.

Companies may apply to the regulatory body for exemption from the bans on anti-competitive practices, if they can show that this will reduce prices for consumers, promote Mozambican exports, speed up economic development, or encourage technological development and innovation. The regulator will then determine whether to grant the exemption, for how long, and under what conditions.

The bill establishes that anti-competitive practices may be punished with a fine of up to five per cent of the company’s turnover in the previous financial year. Companies found guilty of anti-competitive practices may be excluded from public tenders for five years. Other sanctions may include splitting the company in two, or ordering it to cease part of its activity.

Introducing the bill, the Minister of Industry and Trade, Armando Inroga, described rules on competition as fundamental “for safeguarding the rights of consumers and promoting small and medium companies”.

A law on competition, he continued, “will ensure the implementation of good commercial practices, promote and defend free and effective competition, compatible with a market economy, and discourage restrictive practices”.

Inroga claimed that the law will “increase efficiency in production, improve the supply and distribution of goods and services, and promote innovation and better quality”.

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