Ghana is speeding up the processes for passing into law its Competition Policy which has become urgent because it is a necessary condition for the implementation of Phase Two of the Africa Continental Free Trade Area (AfCFTA) in December this year.
Currently, Ghana’s Competition Law is now at consideration stage by Cabinet.
Its passage is critical to the various implementing parties in the sense that Ghana has to meet the December 2020 deadline for implementing the second phase of AfCFTA of which the Competition Law is listed as one of three protocols set to be implemented to safeguard that phase of the agreement which also includes Investment Policy and Intellectual Property Rights.
The preparations follow the recent 10th African Union Commission (AUC) and European Commission (EC) meeting held in Ethiopia where the latter stressed the importance of the second phase negotiations of the agreement and entreated member states who have not yet instituted competition policy to institute measures aimed at implementing the policy.
Ghana has accepted the need for a competition law (known in many jurisdictions as anti-trust law), but has not prioritized drafting a law, until now.
Several industries have near monopolies with regards to market share, which will be affected by passage and implementation of a competition law. For instance, MTN, the pioneer of Mobile Money in Ghana still has a dominant market share of over 90 percent despite competition from both AirtelTigo and Vodafone.
Instructively though, while this gives MTN the opportunity to use preferential intra-network pricing to keep customers, it has declined to exploit this opportunity to its advantage. Indeed, the tendency of many large firms to refuse exploiting monopoly or near monopoly market shares increase profit margins at the expense of their customers is a major reason why government has not bothered with a monopoly law up till now.
The Phase Two protocols aim to enhance the investment policy climate as well as address risks facing businesses and investors on the continent. Already, the two Commissions have agreed on the need to prioritize regional infrastructure as an underpinning element of AfCFTA.
The impending law will need to contain elements that give opportunity to competitors with very small market shares to increase them and also to ensure that where a competitor has an overwhelmingly large market share, it does not take advantage to set extortionist product prices.
Generally, around the world, a market share of 70 percent or more requires anti-trust regulations to kick in.
The Competition Policy is expected to protect, maintain and develop free, fair and equal competition in the market space by making it illegal for businesses to abuse a dominant market position. Having such a regime will also ban anti- competitive agreements between firms who have instituted agreements to fix prices or to carve up markets.
For instance, Small and Medium-sized Enterprises (SMEs) will have a level playing field to be able to compete with their multinational business counterparts and this measure would encourage enterprise efficiency, create wider choice for consumers, curb monopolist or oligopolistic pricing and ensure the need for producers to improve the quality of their products in the market.
With the absence of this law, some businesses engage in restrictive trade practices such as bid-rigging, price-fixing and abuse of dominance through monopolistic and oligopolistic product pricing; and when these occur, consumers do not receive optimal value propositions.
Currently, about 23 African countries have competition laws enforced, but 17 have no competition laws in place, while 10 have instituted competition laws, but have no authority to enforce them. Four countries have competition laws in advanced state of preparation.
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