Finally, a competition (anti-trust) law for Ghana?
News about the impending passage of a Competition Law for Ghana by the Minister of Industries, Agribusiness and Trade, Elizabeth Ofosu-Agyare, at the Government Accountability Series last week at the Jubilee House gladdened the hearts of many enthusiasts of competition and consumer protection laws for Ghana to regulate unfair business practices arising out of abuse of dominant position, unfair trade practices like price fixing, bid-rigging, etc.
Nevertheless, it is important to mention the existence of a “Protection Against Unfair Competition Act 2000”, Act 589.
Overview of control of dominant position in Ghana
Despite the absence of a competition or anti-trust law in Ghana to regulate the abuse by dominant companies in manufacturing and service delivery, Ghana has not stood aloof in this direction.
In the mid-1990s, in response to the escalation in prices by utility companies, the government established the Public Utilities Regulatory Commission (PURC) with the mandate to regulate service charges for utilities, being water and electricity.
As part of their mandate, the PURC was also to ensure service quality and that the prices charged by the utility companies were justified in terms of service quality and delivery.
It must be recalled that at the time, there was agitation for the commission to have the mandate to regulate virtually all services provided by companies, which had a monopolistic or oligopolistic position in the provision of goods and services, such as the then-Ghana Telecom, which had a monopoly over the provision of telecommunication services, Ghana Posts, which had a monopoly over the provision of postal and courier services and Ghana Cement Company (GHACEM), which had a monopoly over the supply of cement.
The government also established the Postal and Courier Services Regulatory Commission (PCSRC) to regulate postal and courier services.
What is competition or antitrust law?
Competition or anti-trust law is a regulation of the marketplace by the government to ensure that the market is not distorted by dominant companies, to prevent market imperfections.
The rationale for competition or anti-trust law is that there should be an efficient allocation of resources in the economy.
It is deemed by the proponents of competition law that when firms are left to operate freely and determine their own conduct, they are likely to distort the market by creating monopolies, cartels and collude among themselves to fix prices that are profitable for them but detrimental to society.
The United States is regarded as the father of competition or antitrust law. In 1890, the US Congress passed the first competition or anti-trust law, the Sherman Act, which sought to constrain competitive behaviour in the US. Section 1 of the law states as follows:
“Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal.
Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony.”
Section 2 of the Act also states as follows:
“Every person who shall monopolise, or attempt to monopolise or combine or conspire with any other person or persons to monopolise any part of the trade or commerce among several states or with foreign nations shall be deemed guilty of felony.”
It is said that the Sherman Act was passed to combat the power of the “trusts”. The purpose of the anti-trust laws leading to the passage of the Sherman Act was to stop the practice of owners of stocks held in competing companies from transferring the stocks to trustees.
The trustees controlled the activities of the competing companies and lessened competition among the companies. This then led to the law being called anti-trust law in the US or competition law in Europe.
Competition law actually has the effect of preventing the concentration of economic power in one or a few companies, regulating excessive profits and the fairer distribution of wealth, thus resulting in the efficient allocation of resources in an economy.
The EU has also promulgated competition laws, aimed at outlawing anti-competitive practices and the abuse of dominant positions.
Korea has the Korea Monopoly Regulation and Fair Trade Act, while Japan has the Japanese Anti-Monopoly Law. South Africa also has the Competition Act of 1998, with a powerful Competition Commission.
The state of competition law in Ghana
Although Ghana does not have a codified and comprehensive law on competition or anti-trust, it is not bereft of a semblance of competition law.
In the Securities Industry Act of 1993, PNDCL 333, it is stated in section 9(h) that the Securities and Exchange Commission shall have the power to “review, approve and regulate takeovers, mergers, acquisitions of any form of business combinations in accordance with the law or code of practice requiring it to do so.
The Bank of Ghana Act, Act 612, also grants the Bank of Ghana the power to approve any mergers and acquisitions in the banking industry.
There is also LI 2491, which regulates pricing in the cement industry, as well as an LI for fixing fees in other sectors like health services, etc.
The obvious rationale for these pieces of legislation is to prevent a situation where a business entity or a combination of business entities, such as cartels, monopolies or oligopolies, might upset the market and create distortions that will ensure that they make abnormal profits to the detriment of the consumer.
The need for a competition law in Ghana
The upward swing of the Ghanaian economy is likely to see the generation of new businesses through mergers and acquisitions.
In the banking sector, there is the likelihood of further consolidation with the prospect of some banks not being able to comply with new capital requirements in the future, which could lead to consolidation and acquisitions, likewise with the insurance industry.
There is also simmering undertones about the prospect of MTN, the telecommunications giant, which has already been declared as a Significant Market Player (SMP), abusing its dominant position in the wake of the difficulties currently being experienced by the only two other existing telecoms companies, Telecel and AirtelTigo.
The local aviation industry, with only two players, Africa World Airlines (AWA) and Passion Air, also gives cause for concern about the possibility of collusion on price fixing and such other situations.
The point must be made that even in America, which is considered as the father of competition or anti-trust law, it took the European Union, with Van Miert as the EU Competition Commissioner, to exact some concessions from the Boeing/McDonnell Douglas merger in favour of Airbus when the merged entity, now Boeing, entered into a contract with the three major airlines, American, Delta and Continental Airlines, to supply them planes for 20 years to the disadvantage of Airbus, its competitor in Europe.
The writer is a lawyer and the Principal of Akyeampong & Co, Corporate and International Business Attorneys with special focus practice in Commercial, Corporate, Banking, Finance, Insurance, International Business, International Trade, Intellectual Property and Mining Law.
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