Category Archives: Speeches/Statements

SPEECH OF HONARABLE MINISTER OF TRADE AND INDUSTRY OF RWANDA, AS THE GUEST OF HONOUR TO THE SENSITISATION WORKSHOP FOR LAWYERS ON THE COMESA COMPETITION LAW HELD ON 7TH JULY 2016 AT LEMIGO HOTEL IN KIGALI, RWANDA

The president of the Rwanda Bar Association,

Director and Chief Executive Officer, COMESA Competition Commission,

Invited Guests, Distinguished participants;

Ladies and Gentlemen;

  • First, join me in thanking the organizers of this meeting, as it comes on the right time when increased intra-COMESA regional trade is taking momentum. It is my sincere appreciation to the COMESA Competition commission for having joined hands with the Rwanda Bar association to organize such an important event for the benefit of the Rwandan legal fraternity. The successful acceleration of the implementation of the COMESA competition regulations is surely one of the critical steps to move forward that dream of bringing together more than 460 million consumers into one COMESA market.
  • This workshop takes place at an opportune time when regional integration is occupying the center stage as one of the key economic strategies and a rallying point for the development of the African continent. Let me also point out that regional integration can only be realized by supporting a strong competition culture in the Common Market. Many African countries have created regional trade agreements with the economic objectives of reducing trade barriers and encouraging economic growth. With this noble objective, intra-regional trade in COMESA has steadily risen from US $3 billion to US $20.9 billion since the establishment of a Free Trade Area in 2000. This however, excludes the informal trade across the borders that currently goes largely unrecorded but which has been estimated at over 30% of formal trade.
  • Intra-COMESA trade is however still low partly due to the similar products that compete for the same market within the Member States and the existence of Non- Tariff Barriers (NTBs). For example in 2013, intra-COMESA trade was recorded at 7% as compared to other regions such as the ASEAN that have recorded 25% intra-regional trade.
  • While we pursue the main objective of cooperation in Trade, Customs and Monetary Affairs to achieve a fully integrated, internationally competitive and unified single economic space within which goods, services, capital and labour are able to move freely across national frontiers, it is important that cooperation strives to achieve the removal of all physical, technical, fiscal and monetary barriers to intra-regional trade and commercial exchanges. These exchanges have led to a phenomenon of globalization.
  • It is a fact nowadays that globalization has brought inter-dependence. Investments, trade, people and ideas have been flowing around the world at an increasing pace and as a result, today, value chains are global; companies increasingly operate internationally; and the biggest of them becomes global entities without any particularly strong attachment to any given nation.

Distinguished participants; Ladies and Gentlemen;

  • While our own COMESA region has developed NTB Regulations that would enable the region to address barriers related to intra-regional trade, it is important to build and safeguard competition and nurture global trade. In today’s landscape, countries and regions thousands of miles apart have come to rely on each other for their wealth and social well-being. Competition in globalization is a fact of life – you can’t stop it. What you can do is manage it to reap its benefits to the full and limit the negative impact it can have. In this regard, and at the center of this globalization, competition has become a culture and is spreading. The global market place brings benefits, but also increases the need for a robust legal framework to ensure that markets stay competitive.
  • At the same time as countries are increasingly dependent on each other even if they don’t share a border, many countries have seen an increased need for robust competition enforcement at home and at regional level such as COMESA.
  • A growing number of countries have felt the need to introduce laws and set up public and independent authorities to make sure that companies behave.
  • Consequently in 2010, the Government of Rwanda adopted the Competition and Consumer Protection Policy, and later, in 2012, the Law Relating to Competition and Consumer Protection was enacted. The government is also in the process of establishing an independent authority, Rwanda Inspectorate and Competition Authority (RICA) that will effectively carryout the competition regulatory mandate. The law establishing this authority is awaiting parliamentary approval.

 

  • There is therefore great effort to increase the effectiveness of the current competition framework in Rwanda as a tool to support private sector development and economic growth, strengthen capacity on competition enforcement, and identify regulatory constraints that hinder the development of well-functioning markets.
  • This training workshop therefore comes at the right time when the Government of Rwanda is focusing on the accelerating the implementation of not only our competition Policy and Law but also competition policies and regulations of other regional markets such EAC and COMESA.

Distinguished participants; Ladies and Gentlemen;

  • I wish to stress that Rwanda is placing strong emphasis on the issue of competition law and policy as a cornerstone of modern market economy and crucial to ensure sustainable economic development and attracting more investments. We are also happy to collaborate and pursue the enforcement of the same at regional level including COMESA. We have indeed been collaborating with the COMESA Competition commission most especially in the areas of Mergers and Acquisitions by supporting Merger Controls, Notification of a Prospective Mergers, Merger Proceedings and investigations, and Consideration of Merger requests. We shall continue to commit to this noble cause unreservedly and I wish to personally commend the good work being done by the Director and CEO of the COMESA Competition Commission and the support Rwanda has received from the Commission.

Distinguished participants; Ladies and Gentlemen;

  • It is possible that some of us who are here have followed closely developments in the COMESA region and most especially, the work of the COMESA Competition commission. I wish to emphasize on the need for strong competition regulations and competition compliance. Economic development and growth has to have a well-functioning and an effective market competition in order to improve private sector competitiveness but it also has to conform to certain rules. This goes a long way to contributing to cost reduction, foster innovation and productivity growth.
  • Think of two multinational companies that intend to merge. Since the companies do business in many countries, they will seek approval from the competition agencies in each one of them. It may take a long time before they have the green light from all and the process may cost them a lot of money and red tape.
  • When a merger threatens the competitive structure of a market, it usually gets approved on condition that certain assets and operations are sold – the so-called remedy packages. What if different agencies accept different or – worse – inconsistent remedies?
  • There is a real risk here: if each national agency looks at things too narrowly, we end up collectively achieving little more than keeping a lot of enforcers and practitioners busy.
  • We all share a common responsibility for making sure that we don’t produce divergent outcomes – and this is where the work of the Commission becomes paramount.
  • To be effective, we need a strong competition community, both among enforcers and practitioners that share the same basic values and objectives. Enforcers should share the same set of principles and the same views regardless of where they come from and the legal fraternity should not be left behind as they play a critical, if not a pivotal role in ensuring that there is a structured cooperation among parties.
  • The COMESA Competition regulations serves as a framework that national authorities can use to work with in COMESA countries as they conduct merger investigations and other forms of anti-competition cases involving several jurisdictions. The regulations are based on the real-life practice of member agencies and gives practical guidance on matters of competition. Cooperation and collaboration between the legal fraternity in Rwanda and in COMESA countries with the Commission and national agencies will be very critical for the success we aspire to and the best way do this is continue to work together on concrete cases with a pragmatic attitude.
  • And going forward, we shall need a continuous and lively debate on how best to enforce anti-competition regulations. This training therefore is not the last because we should not forget that competition enforcement is a delicate and difficult trade. Any good enforcement system must have built into it the ability to evolve and improve as growth of transactions become voluminous and complex.

Distinguished participants; Ladies and Gentlemen;

  • The Government of Rwanda through different institutions is very keen and, indeed, takes the lead in ensuring that all efforts, Laws and mechanisms are put in place to make the full COMESA integration a reality. The COMESA competition Commission will continue to receive support in order to materialize its tasks. This initiative that gathers us all here is therefore all the more relevant. Let the advocacy work not be limited to a few countries or to awareness rising alone but tackle other important political economy reasons that may hinder effective implementation of the COMESA competition programs. We continue to stress the role of active involvement of the civil society and the Rwanda Bar association in evidence-based advocacy and representations of their clients and the Ministry of Trade and Industry’s participation in this meeting is a significant sign that Rwanda acknowledges the legal contribution in influencing competition and resolving disputes.
  • I would like to conclude this statement by wishing you fruitful deliberations and hope that our guests will enjoy their stay in Rwanda. I thank you very much for your attention and it is now my pleasure to declare this workshop officially open.

 

Thank You!

Opening speech – By the Director of the COMESA Competition Commission at the Training Workshop of the Merger Assessment Guidelines held at BOMA Inn Hotel, Nairobi, Kenya on 3rd November 2014

Distinguished staff members representing national competition authorities here present, the co-sponsors of this very important function - the World bank, distinguished participants; ladies and gentlemen.

I wish to welcome you to this important event at which the COMESA Competition Commission is presenting for the first time the Merger Assessment Guidelines as approved by its Board of Commissioners at its 6th Meeting held in Lilongwe, Malawi. Consequently, it should be appreciated from the beginning that this event is meant for the discussion on the application of the guidelines in relation to the enforcement of the COMESA Competition Regulations by the various users of the regional competition system. Hence, we do not expect at this event to discuss in substance the guidelines as it was the case with the last two gatherings held in Johannesburg and Addis Ababa. That will be reactivated later in the course of time. It is important to mention at this stage that this does not mean the continued discussions to improve our regulations have been closed. Not at all, as you may know, there is no finality in drafting guidelines hence we shall continue opening new forums for consultations and discussions.

We thank you for having agreed to come and share your views with us on this very important assignment.

Ladies and Gentlemen,

Allow me to express our profound gratitude to our co- sponsors of this event, the World Bank Group for agreeing to host this event and for the tremendous hard work their officers rendered in the preparations and the necessary logistics.

Distinguished Delegates,

This workshop takes place at an opportune time when regional integration is occupying the centre stage as one of the key economic strategies and a rallying point for the development of the African continent. Let me also point out that regional integration can only be realized by supporting a strong competition culture in the Common Market.

Hence, one of the objectives of the Treaty establishing the Common Market is the attainment of single market integration. The single market integration remains a key feature of the Common Market competition law and policy. As a result, the COMESA Competition Regulations are applied by the Commission with the objective of single market integration in mind. Agreements and conduct which might have the effect of dividing the territory of one Member State from another will be closely scrutinized and may be prohibited by the Commission.

The merger control provisions of the Regulations are an important component of most, though not all, systems of competition law. Since we commenced operations in January, 2013 the most active provisions of the Regulations has been the major control provisions. And since commencement, the Commission has found itself with the primary responsibility for explaining and interpreting the Regulations and for responding to inquiries from the public concerning their application. This prompted the Commission to commence the development of the Merger Assessment guidelines.

The process of developing the merger assessment guidelines has been with us for a long time. You will recall that the process of developing the merger assessment guidelines commenced immediately the Commission was established, and it is true that most of you present today have been part to this long process from that day. Hence, it is now important that we conclude this exercise.

As you may be aware, the Regulations were approved by Council in 2004. This means that a period of nine years had passed before the implementation of the Regulations commenced. During this period of the Regulations’ inactivity, markets had evolved legally and structurally among other things from the conditions prevailing when the Regulations were approved by Council in 2004. Therefore, when the Commission commenced the implementation of the Regulations in January 2013, some challenges immediately became apparent. In the area of merger control, some of the challenges included - :

  • Notification : Article 24 (1) “a party to a merger shall notify the Commission in writing of the proposed merger as soon as it is practicable but not later than 30 days of the parties’ decision to merge”. What amounts to ‘decision to merge’ has not been defined in the
  • Article 3 (2): the interpretation is not clear when read together with Article 23 (3) vis a vis notifiable The question is – Given the Zero threshold: Who determines whether a conduct has ‘an appreciable effect on trade’. Is it the parties or the Commission? At what stage should such a determination be made?
  • Notification Thresholds :
    - Article 23 (4): The Board with the approval of the Council has prescribed the threshold at Zero. This has in turn generated serious concerns, namely:-There is a risk that transactions where the targethas no activity in the Common Market whilst the buyer only has very limited activity but in two or more Member States, would need to be notified to the Commission.
  • It has been argued that the zero threshold renders even extremely small transactions.

In order to address these challenges and many more others, we found that, there may be need to amend some provisions of the Regulations and Rules. However, it was decided that, in the meantime, as we ponder amending the ions, we first come up with the Merger Assessment Guidelines.

Therefore, in October 2013, the Commission and the International Finance Corporation signed a Cooperation Agreement which led to the engagement of a consultant tasked with the following deliverables:

  1. Report on prescribed threshold of combined annualturnover or assets in the region including the calculation method and text that can be used for advocacy purposes explaining the merger notification threshold under Article 23(4) of the Regulations;
  1. Revised/modified filing fee;
  2. Amended merger control legal framework; and
  3. Draft the Merger Assessment Guidelines

The purpose of the Guidelines is to set forth framework to be applied by the Commission when determining whether a merger "is likely to substantially prevent or lessen competition" as per Article 26.1 of the Regulations. The Guidelines before you are therefore as a result of broader consultation with various stakeholders, in the region and internationally. They seek to explain the operation of the Common Market system of merger control: This reflects the Commission’s intention that the new regime should be transparent as much as possible.

The Guidelines are intended to provide information so that the parties to a merger, industry participants, professional advisers as well as the public may:

  • Consider the likely level of scrutiny that a proposed merger will receive by the Commission;
  •  Improve the understanding of the application of Articles 23-26 of the Regulations,
  •  Assist in structuring (or restructuring) proposed mergers to avoid raising competition concerns;
  •  Identify the types of information that will assist the Commission in assessing the likely impact on competition; and
  •  Understand the Commission’s approach to potential

In carrying out its functions, the Commission will have regard to these Guidelines. However, merger assessment is inevitably case-specific. Hence, there may be situations whereby the Commission may consider each merger with due regard to the particular facts of the case, including the information available and the deadlines applicable to the case, and will apply these Guidelines flexibly, departing from them where it considers it appropriate to do so.

Ladies and gentlemen, as economic theory, legal thinking and best practice develop; the Commission may hence revise the Guidelines from time to time to reflect new developments. It is however important to be mindful that at this particular moment, the guidelines should as much as possible implement the Regulations as they are currently provided for. This means that we should avoid contradicting what is currently in the Regulations, as the process to make amendments to the Regulations is still in progress.

I wish to assure that the Commission received so many comments on each subject matter, and the comments were given due consideration by both the Commission and the Board. In a situation like this it not possible to adopt all the submissions. As you may know, COMESA consist of 19 Member States and its trading partners go beyond the Common Market hence, it requires consensus building and a balancing act. The Board adopted what we felt was beneficial to the Member States and what would work in the best interest of all Member States not a few. I however wish to state, as I mentioned earlier, that there is no finality to the process of legislating and drafting related guidelines and we shall keep calling on you when need arises.

Allow me to conclude by sincerely thanking our consultants and the World bank group for the  excellent work done and all of you who spared time at several times to participate in this project. The Commission had the privilege of learning a lot from your submissions and discussions. The written submissions from the law firms in the region were very helpful and we shall continue with the process of implementing them.

Thank you very much !!!