"Without Competition Law, Nigeria's Vision 202020 is a Mirage"
"Without Competition Law, Nigeria's Vision 202020 is a Mirage"
Introduction
Nigeria would be constructing the foundation of its vision 202020 and its economic emancipation and liberalization on a sandy soil, if the nation continues to fail in putting in place its competition law.
This was the confessions of Professor Oyejide Ademola, Chairman, Federal Government Committee on Multilateral Trade in Abuja recently.
Competition law known as antitrust law in the USA are laws that promote or maintain market competitiveness by regulating anti-competitive conducts.
According to Wikipedia, the free encyclopedia, Competition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct.
The history of competition law reaches back to the Roman Empire. The business practices of market traders, guilds and governments have always been subject to scrutiny, and sometimes severe sanctions. Since the 20th century, competition law has become global. The two largest and most influential systems of competition regulation are United States antitrust law and European Union competition law. National and regional competition authorities across the world have formed international support and enforcement networks.
Looking at the Europe, which is the union of nations wanting to go into a serious trade protocol with the African, Caribbean and Pacific (ACP) including Nigeria. These nations are trying to close a deal on Economic Partnership Agreement (EPAs) which when concluded will open up their domestic markets to aggressive competitions including anti-competitive behaviours in the market.
The European Union (EU) has put in place fortified mechanisms to ensure the completion of its internal market, which ensured free flow of working people, goods, services and capital in a borderless Europe.
Under the EU's competition law there are four policies that regulate formation of cartels, monopolies, mergers and state aids to companies.
This is why across the EU there is uniformity in pricing development and even gross domestic contributions.
The Ecowas has seen that engaging the EU in EPAs without a regional competition law would be assassinating as the free market economy of the EU will flow into the sub-region which is not prepared yet .Ecowas saw that no amount of tariff which still will gradually give way could initially protect the productive and manufacturing base of the sub-region. In order to have Ecowas of people instead of Ecowas of States, just as it is in the EU, a competition law is a must and again it is a matter of urgency.
However, direct distortion of a nation's domestic market will happen to any nation in the region that fails to have a local competition law.
Mr. Ken Ukaoha, president, National Association of Nigeria Traders (Nants), said at a recent stakeholders' consultative workshop on competition law making process in Nigeria organized by Nants, that a local law should be in place to receive the international or regional one coming in.
According to him, this local competition law which Nigeria is yet to have will tailor the external one in the way it will suit the local productive system. On the other hand, Professor Ademola, said that where Nigeria is unable to have a local law in place, the nation would find application of a law that is novel in the system and given that the formulation was not for Nigeria and its market specifically, there will be serious problems in the system as no local monopoly or cartel could stand the level of competition that would flow in with goods and services under the free market economy which Ecowas, EU and the World Trade Organisation (WTO) are pressing and preaching.
Competition Law and Poverty Reduction
78 to 80 per cent of the nation's business community is controlled by the Small and Medium Enterprises (SMEs). Ukaoha said that this 78-80 per cent of Nigeria's business community face all manners of marginalization and other anti-competitive practices in Nigeria due to obvious lack of competition law in the system.
What it means is that only about 20 per cent being monopolies or cartel group create the imbalance in the system-no wonder level of unemployment has continued to be on the rise with more firms that are unable to compete in the imperfect market closing shops. Ukaoha said that if the 80 per cent which is controlled by the SMEs is not protected through a competition law, it means wide spreading of poverty. On the other hand, soon Nigeria will join other nations in the new world free market economy. When this happen, it would be obvious that there will be terrible crisis as goods and services will flow into Nigeria unregulated.
This means also that even the biggest local cartels and monopolies would look like little SMEs that cannot on their own compete in the new world free market system. This would add to impoverishing the situation on ground thus creating more poverty situation in the economy.
Mr. Edo Ukpong, chairman, Competition Law Committee Section on Business Law, Nigeria Bar Association (NBA) warns and points to the need for Nigeria to have this law in place to kick start sanitization of local market before the free market economy arrives.
In effect, there is a direct linkage between competition law and poverty reduction or escalation depending on the treatment the competition law received.
Competition Law and Trade Protocols
Nigeria's involvement in the EPAs negotiation as well as the WTO could be said to have happened without any necessary empowerment.
All these protocols do have an aspect in them that treat the issue of competition, Ukaoha said. It would then be laughable if Nigeria that has no competition law would be participating in protocols that have competition as part of their component. This is why most trade agreements and pacts Nigeria was involved in the past did not benefit the nation as the local products are always negatively affected, Mr. Femi Boyede, Lagos based Trade Consultant said.
According to Boyede, Nigeria should not ratify or sign any further trade protocol until a domestic competition law is in place.
For Ademola, Nigeria must have this law ready before EPAs is signed. Buttressing his reasons, he said that Nigeria is loosing in the Ecowas Trade Liberalisation Scheme (ETLS) simply because Nigeria has the biggest market in the sub-region that is not regulated. According to him, when EPAs and other protocols from WTO come into operation in the sub-region, Nigeria will suffer the most especially as it has no competition law that will guide movements of goods and services given it has the biggest market in the sub-region.
Nigeria and its Competition Policies
About five different versions of the competition policies are in circulation in Nigeria now with three of them having been pushed to the national assembly.
This shows that the nation is aware of the relevance of such a law in the system.
But the problem facing Nigeria in passing into law the bills is double barreled. Harmonisation of the existing versions and pressures from local cartels and monopolies, Mr. Nnamdi Dimgba, a consultant on competition law said.
Dimgba stressed that without hormonisation of the versions in circulation to come up with an all-encompassing version, it would be difficult as rivaling government agencies are in the forefront of the fight on which bill sails.
In the meantime, the Ministry of Commerce and Industry has one while Bureau of Public Enterprises (BPE) has the other. Another three versions are still there in the system.
Dimgba yet identified serious coordinated pressures from some cartel groups who do not want any competition law in Nigeria. Some of these cartel groups and monopolies create very bad market situation to stifle the smaller players. The recent merger between Dangote Cement and Benue Cement has been severally criticized by trade experts who said that it is only in a country like Nigeria where there is no competition law such could happen.
This merger arrangement has also challenged the competition policy of the Security and Exchange Commission (SEC) that approved the merger.
Recently South African Multichoice, operators of DSTV in Nigeria has crashed its price to N9000, just to stifle the market for Startimes, HITV and other providers of similar services.
Just like Dangote Cement, Multichoice controls over 80 per cent of the local market. In an environment of competition law, there would be regulations even extending to incessant policy twists and summersaults Nigeria has witnessed and still being battered with.
Intervention by Nants
Nants identified this lack of a Nigerian competition law as a serious hindrance to fair and efficient business practices in Nigeria. Investigating why this was so, it was discovered that there were about five versions of draft competition bills in the public domain. Nants took up the challenge of pursuing a process of wide consultation among relevant stakeholders. This is in the belief that a wider consultation and dialogue among stakeholders would facilitate the passage of a more inclusive and relevant competition law.
To have this belief a reality, Nants contracted Adam Smith International, a UK based Economic and Institutional Advisory firm with practical experiences in advisory on competition law, policy and institutions to work with a local consultant and Nants.
At the end, Nigeria competition Bills matrix which identified areas of convergences and divergences of the flying bills was achieved by Nants.
The aim was not to criticize any bill but to facilitate the production of one-all-inclusive bill that will be pushed to the national assembly.
In order to present this report to the stakeholders, Nants organized a consultative workshop which held in Abuja recently.
The two-day workshop which was entitled The Competition Law making Process in Nigeria' produced at its end a coalition called Competition Law Advocacy Coalition (CLAC) which would be the body pushing for a Nigeria with a competition law.
Why Nigeria Needs a Competition Law
The West African region is in the process of harmonizing all regional policies and protocols. Why is Ecowas going this way? It is because there is a process of moving Ecowas from its present Ecowas of states to Ecowas of people. This implies borderless Ecowas presenting a union similar to that of EU, Ukaoha said.
This will place citizens of the sub-region first to Ecowas before identifying them to their respective countries, he added.
Now we have Ecowas Common Agriculture Policy (Ecowap), there are protocols on the right to establishment, residence and movement, signifying that Ecowas is moving towards a bloc of united nations of people.
There are also common trade and industrial policies still being harmonised. Now in the face of all these policies that are being harmonized to be the regional policy or law, if Nigeria is to continue to be a member of Ecowas but without a domestic law/policy that will receive these regional policies, it will be devastating.
Presently Ecowas has put together common competition policy and a supplementary Act on competition, so Nigeria must as a matter of utmost urgency come up with domestic competition law.
Secondly, Nigeria's dream of becoming one of the 20 most industrialized economies in the world would be child's play if there is no competition law in place.
There is no developed economy that is existing without a competition law or policy, so how would Nigeria think of achieving this lofty dream if the pillars to the dream are left behind, Ukaoha wondered.
Industrialisation has always opened economies to all kinds of competition; Nigeria must have a domesticated law on competition before opening itself to competition.
Thirdly, one of the critical components of the EPAs is the competition policy because this is a protocol that is talking about opening up of local markets to unrestricted competition.
The question trade experts have been asking has been how Nigeria would regulate competition from Ecowas and the EU when EPAs comes into force since Nigeria is one of the negotiators with no domestic competition law/policy.
The fourth one is in the WTO negotiation which Nigeria again is also a negotiating member.
At WTO, a component of the negotiation called the Singapore Issue talks about four important areas including investment policy, government procurement policy, trade facilitation policy and competition policy. These issues were kept aside in the past by negotiating countries for lack of competence. However, the issues are today being placed at the frontline of negotiations.
In the case of Nigeria that currently does not have competition policy, how would Nigeria be part of this negotiation in a sustainable way when there is no domestic guide, experts query. This again points out to the urgency for Nigeria to put in-place a competition law that will guide acceptance of such protocols in which Nigeria finds itself today.
Nigeria is made up to 80 per cent of the business community controlled by the SMEs. There is need for a competition law to provide a level playing arena for competition. Where this is not obtainable, as it is now in Nigeria, what you find are too many anti-business practices taking place which contributes in creating unfairness in the system.
The big firms that have the financial muscle do whatever they like, in a case like this, it is only the competition law that takes into account the plight of the smaller enterprises.
Nigeria needs competition law to achieve the demands of industrialization and its vision 202020.
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