12 December 2012

Zambia: CCPC Acts Against Uncompetitive Firms

COMPETITION in any country leads to economic development as economic players always strive to provide better quality of goods and services to the consumers.

This provides an even business environment to the small and large businesses while assuring the consumers of value for their money.

The Competition and Consumer Protection Commission (CCPC), formerly Zambia Competition Commission (ZCC) is a statutory body constituted under the Competition and Consumer Protection Act No.24 of 2010 (the Act) by the Parliament of the Government of Zambia.

The CCPC has been able to enforce the competition and consumer laws resulting in most of some business houses being prosecuted unlike in the past where most of the perpetrators used to go scot-free.

Recently, the commission scored a plus when a Lusaka Magistrate Court fined Spar Downtown and Crossroads a total of K63 million each for selling expired products contrary to Section 50 (1) and (2) as read with Section 52(1) of the Competition and Consumer Protection Act number 24 of 2010.

This relates to a matter in which the Competition and Consumer Protection Commission (CCPC), jointly with the Lusaka City Council Public Health department, carried out random inspections in Lusaka's retail shops including Spar Downtown and Spar Crossroads.

It was found that the two shops had a number of products displayed on their shelves for sell to customers that were found to have had either expired or had no expiry dates, or no proper labelling.

In passing the sentence, Magistrate Ng'ambi fined both Spar Downtown and Spar Crossroads 150,000 penalty units equivalent to K27 million each for breaching Section 50 (1) and (2) of the CCP Act.

The Court also fined the two 200,000 penalty units (equivalent to K36 million) each for breaching Section 52(1) of the same Act.

The court, in passing sentence, noted that although the two enterprises were first offenders the offence was grave since it has a bearing on the health of the consumers and so the fine imposed was meant to be deterrent in nature.

Commenting on the outcome of the court case then CCPC acting Executive Director, Willard Mweemba, urged consumers to be vigilant and report all such instances to the commission.

"This is a good development for the consumers who are the victims of such malpractices. May I take this opportunity to urge consumers to be more vigilant and report such instances to the commission," said Mr Mweemba.

Mr Mweemba warned traders that the commission would relentlessly pursue such malpractices, adding that it should not shy from prosecuting offenders perpetrating such vices.

In September this year the Lusaka Magistrate Court found guilty Mercury Express Logistics Zambia Limited, Mark Foden and Charles Nkandu and fined them K8 million on one count of effecting a merger acquisition without the authority from the Competition and Consumer Protection Commission (CCPC).

The court fined the trio K8 million each to be paid immediately failure to which a warrant of distress would be issued against Foden and Nkandu for their imprisonment of 9 months had been ordered.

The Court found them guilty on one count of effecting a merger acquisition without the authority from the Competition and CCPC, contrary to Section 8 (1) and (2) of the Competition and Fair Trading Act, Cap 417 of the Laws of Zambia.

The court found that the prosecution had further proved beyond reasonable doubt in that it adduced evidence to show that Mercury Express Logistics Zambia Ltd, under the same management, occupied the business premises of Globe Flight Zambia Ltd and took over the business previously operated by Globe Flight Zambia Ltd on behalf of Globe Flight South Africa.

The court found that, according to the Act, a merger may occur when one or more firms directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another firm.

He added that a merger may occur through a purchase or lease of shares and assets, joint ventures and/or pure amalgamation of firms or businesses.

Magistrate Banda stated that the competition law intended to advance fair competition in the market and as such its breach must be punished.

He noted that the provision dealing with sanctioning such conduct provided for an option of a custodial sentence of not more than 5 years or a fine not exceeding K10 million or both.

It was found that the Supreme Court, in its rulings, had stressed that where the law provided for such an option, the courts should endeavour to impose a fine unless in very serious circumstances where a custodial sentence is deemed appropriate.

By curbing illegal mergers for the big companies, the commission is helping companies with small capital bases to compete with the big ones because the competition law inhibits monopolies from sprouting.

This is also helping consumers to get value for their money unlike in the past where customers had nowhere to take complaints of unfair trading practices and other disclaimers.

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