Mauritius: Competition Commission
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Founded in 2009, the Competition Commission of Mauritius (CCM) has been in existence for only a decade. In that short lapse of time, the CCM has established a solid track record in enforcing competition law in Mauritius. It has effectively dealt with different forms of anticompetitive conduct across various sectors of the Mauritian economy and recently picked up much-needed momentum in the area of anti-cartel enforcement. The past few years have also witnessed the CCM opening up its horizons from scrutinising cross-border merger transactions to investigating complex abuse of dominance cases.
Alongside enforcement, the law mandates the CCM with an advisory role to government further to any action or proposed action it makes that may adversely affect competition. The CCM recurrently advised government on various policy decisions. With the aim of boosting the awareness of its competition law and the deterrence of anticompetitive conduct, the CCM carried out several advocacy initiatives targeting businesses, associations and the public in general. With a view to improving its performance, the CCM has put a lot of effort into building up its institutional capacity, involving the upgrading of skills to keep pace with a rapidly evolving business landscape and organisational strengthening to reinforce the capabilities of the CCM.
With economies moving ever closer together and becoming more interdependent with globalisation, cooperation with local and international bodies has ranked high on the agenda of the CCM. In many instances, cooperation with both local regulators and international competition agencies has been formalised in memoranda of understanding (MOUs). The CCM formalised its collaboration in the form of an MOU with the COMESA Competition Commission (CCC), which has resulted in new work streams. It is now part and parcel of the enforcement routine of the CCM to collaborate with the CCC on regional merger transactions and potential anticompetitive agreements.
The CCM has restructured its operations through the setting up of work groups on functional and instrument-based structures. The working groups are geared towards specialisation, accountability and ownership whilst maintaining the internal flexibility. After the years of operations, the CCM has also felt the need to identify the potential shortcomings and areas within the competition law which would need reinforcement. In the context, the CCM has embarked in the process of its competition law review. This will enable the CCM to align itself with international good practices and other regional commitments.
Review of operations
In its 10 years of existence, the CCM has conducted numerous pre-investigations (enquiries to establish whether there are reasonable grounds to launch investigations) and investigations across the different sectors of Mauritius including: media and information and communications technologies; food and beverages; insurance; banking and finance; and construction and property development. To date, the CCM has launched around 243 pre-investigations and 46 investigations inclusive of merger, abuse of monopoly and cartel cases. With a total of 216 pre-investigation cases and 32 investigations completed, an overview of the most recent cases led by the CCM is provided next.
Since 2009, the CCM has undertaken around 50 pre-investigations (Phase I review), eight of which proceeded to investigations (Phase II review) in relation to merger transactions. As of 2018, the CCM has also been screening about 250 transactions on a monthly basis. These transactions relate to change in shareholdings that are notified at the level of the Registrar of Companies. The CCM views this as a solid stepping stone given the fact that the Competition Act of Mauritius does not prescribe for mandatory pre-merger notification.
The CCM has also collaborated with the CCC to review mergers that affect Mauritius. In that context, the CCM has provided its input and views on 85 mergers notified to the CCC covering a range of sectors including healthcare, retail, automotive, logistics and agro-industry sectors, among others.
Pursuant to the attunement of the CCM to occurrences in the Mauritian economy, the following transactions have recently been reviewed.
In 2018, the ENL group, one the major conglomerates in Mauritius, announced the amalgamation of ENL Land, ENL Limited, ENL Finance Limited and ENL Commercial Limited with, and into, La Sablonnière Limited. Several of these companies are listed companies. The ENL group sought the view of the CCM on the matter, which concluded that the transaction did not substantially change the control of the entities concerned nor amount to a merger situation within the meaning of the Competition Act.
During 2018, the CCM was also informed of an acquisition in the retail sector involving the largest group of supermarkets in Mauritius, Pick and Buy Ltd, acquiring the supermarkets of Shoprite (Mtius) Ltd. Shoprite (Mtius) Ltd had already resolved to exit from the Mauritian retail sector. The CCM had concerns over the geographical market of Port-Louis, the capital of Mauritius, where these two supermarkets were very close competitors. The CCM considered structural remedies for the market of Port-Louis, however these were not possible due to third-party issues. As such, comparing the counterfactual, behavioural undertakings with respect to price, line of service and operations were accepted.
The CCM also assessed the acquisition by health insurance provider Mauritius Eagle Insurance Ltd of health policy administrator Medscheme (Mtius) Ltd. The transaction was of a vertical nature. The parties offered undertakings to the Commission and the assessment is ongoing.
In an endeavour to further facilitate merger notifications, the CCM is issuing a guidance note on merger notification which clarifies policies of the CCM on notification and elucidates the ‘business friendly’ approach used, while maintaining rigour of a serious enforcer.
Abuse of dominance
The CCM has been engaged in the review of a total of 121 abuse of monopoly cases where 19 resulted in investigations, of which the CCM completed 16. The outcome of the investigations varies between infringement decisions, imposition of remedial measures and undertakings offered by the parties.
The most recent completed investigation relates to merchant discounts charged by CIM Finance Ltd whereby the latter offered the commitment that it will change its conduct of charging significantly different merchant discounts. It undertook to bring down the maximum difference between the highest and lowest levels of merchant discounts to residual levels. The remaining two investigations are currently before the commissioners to determine whether a restrictive business practice is occurring or has occurred, and to impose any remedy they think fit to address the competition concerns identified.
In 2017, the CCM completed its investigation in relation to the pricing of mobile telephony services in Mauritius. The investigation was related to alleged price discrimination between voice calls exchanged between customers subscribed with the same mobile telephony operator (on-net calls) and between subscribers of rival operators (off-net calls).
Mobile operators in Mauritius distinguish between on-net and off-net mobile voice calls in terms of tariffs. An on-net call is one placed by a subscriber of operator A to another subscriber of the same operator. An off-net call is placed by a subscriber of operator A to a subscriber of operator B. An on-net call can therefore be described as a call that originates and terminates within the same Public Land Mobile Network (PLMN), and an off-net call is one which originates from the PLMN of one operator and terminates on the PLMN of another.
The CCM enquired and found that the main parties to the investigation discriminate between the prices or traffic allowance between on-net and off-net calls for part of their commercial offers. This could potentially constitute an abuse of a monopoly situation.
The findings of this investigation revealed that first-time and existing subscribers were artificially induced to join or remain with a dominant player. The dominant player was found to be in a position of dominance in the local mobile telephony market, unlike a smaller player. The pricing model difference of the dominant player showed that it is encouraging subscribers to follow the choice of network of their family members and friends, which artificially maintained the market share of the operator.
The CCM recommended, among other remedial measures, that the dominant player be banned from discriminating between rates for on-net and off-net calls for an initial period of at least two years across the whole Mauritian contingent, including Rodrigues. The final report is presently before the commissioners.
Another investigation, completed in December 2016, relates to payment cards. Launched in 2012, it concerns the set of agreements that Visa and MasterCard respectively concluded with 13 local banking and non-banking financial institutions participating in the Visa and MasterCard respective payment networks. The CCM has, in particular, investigated the level of issuer interchange fees (IIF) set by Visa and MasterCard under their respective agreements for point-of-sale (POS) transactions effected in Mauritius using locally issued classic debit and credit cards carrying the Visa and MasterCard brands.
It was found that the current levels of IIF for local POS transactions constitute a major component of the Merchant Service Charge (MSC), which in turn inflates the base on which merchant-banks set the MSC. It is therefore preventing, restricting or distorting competition in the market for card-acceptance facilities. This is because some banks have both a large pool of cardholders and card-accepting merchants. Because of their larger cardholder base, the majority of card transactions processed at their local POS terminals are effectively using cards issued by them. They are therefore in a position to offer better MSC rates than small merchant-banks as they recoup a significant proportion of the IIF paid from their card acquiring business through their issuing business. This, in turn, may be limiting the ability of small players to offer competitive MSC rates and compete more effectively.
After an extensive information gathering and engagement process with parties and stakeholders, the CCM recommended that the IIF be lowered along with a series of informational remedies, which is believed to be necessary, reasonable and practicable, to address the competition concerns identified in the payment cards market. The matter is presently before the commissioners.
The CCM also completed its investigation of exclusivity clauses put in place separately by Western Union Company and MoneyGram Payment Systems Inc preventing their agents in Mauritius from selling competing services. During the investigation, the CCM received an undertaking from both parties to address the identified concerns of the CCM. They undertook to remove the post-termination non-compete clause that prevented agents from offering competing services after termination of their agreement and to offer agents choices with respect to their agency agreements.
The CCM has also been actively involved in the dismantling of cartels and has completed 10 investigations since 2009. Of the 47 pre-investigations conducted, 30 were closed and 17 have been progressed to investigations. The CCM is currently conducting seven cartel investigations.
One of the recent cartel cases which relates to potential resale price maintenance is in relation to Chantecler branded chicken, referred as the Panagora case, in which the commissioners imposed record fines of 29 million Mauritian rupees on Panagora. This case is presently on appeal before the Supreme Court and the dispute in relation to the CCM’s findings for the Panagora case is still ongoing. The latter’s arguments focused mainly on the absence of an agreement on the part of resellers to Panagora’s conduct and on efficiency gains accruing to resellers from the impugned conduct. The CCM rejected both arguments, finding the existence of agreement on the part of resellers that implicitly acquiesced to Panagora’s offers with the affixed resale prices.
In 2014, the CCM also investigated two beer companies, Phoenix Beverages Ltd and Stag Beverages Ltd. The allegation was that the two companies had jointly agreed to share the market for beer in Madagascar and Mauritius respectively. The executive director was concerned that such an agreement could result in exclusive allocation of the beer market in Mauritius to Phoenix Beverages Ltd, in addition to restriction of the supply of beer in Mauritius subsequent to the closing down of Stag Beverages Ltd. Phoenix Beverages Ltd applied to leniency in exchange of information on cartel activity in which it was involved. They submitted information to the CCM, which led to the findings of a collusive agreement between Phoenix Beverages Ltd and Stag Beverages Ltd. While accepting the leniency application of Phoenix Beverages Ltd, the commissioners ordered the imposition of financial penalties of 20.2 million rupees and 6.5 million rupees on Phoenix Beverages Ltd and Stag Beverages Ltd respectively.
In 2018, the executive director of the CCM issued his final report in a cartel case involving two enterprises in the agrochemical industry. Financial penalties in excess of US$2 million have been recommended by the executive director. A hearing by the Commission is scheduled for June 2019 to hear the parties before a decision is issued by the commissioners on the matter. It is to be noted that one of the parties to this investigation had applied for leniency and leniency plus.
Advice to government
The law provides for the CCM to advise the government on any action taken or proposed to be taken that may adversely affect competition in the supply of goods and services. To date, the CCM has also delivered around five pieces of advice to government on various policy decisions in relation to the sugar, cement, scrap metal, cattle and pork sectors in Mauritius.
The last advice concerned the granting of import permits for processing-grade pork subject to an equivalent volume of slaughtered pig to be purchased from local breeders. The regulatory measure was intended to protect local breeders and to secure an outlet for them to sell excess produce. However, the measure resulted in anticompetitive effects in reducing the ability of pork processors (except the leading one, which was granted import permits without having to buy locally slaughtered pig) to compete in the supply of processed pork in Mauritius. With the exit of some local pork processors, local breeders could no longer rely on them to absorb their excess produce, thus rendering the regulatory measure ineffective and ultimately not for the benefit of local pig breeders.
The Commission issued advice to the concerned ministry recommending that the policy be abolished and that other regulatory measures be considered to protect local pig breeders.
By way of issuing advice to the government, the CCM tries to always keep abreast of the state policies that might adversely affect competition.
In addition to providing advice to the government, the CCM is mandated to undertake general studies on the effectiveness of competition in individual sectors of the economy in Mauritius. Since it was formed, the CCM has conducted four market studies: two of these were related to the cement sector and saw the liberalisation of market; one was related broadly to the construction industry; and the fourth, focusing on the pharmaceutical industry in Mauritius, is ongoing.
The CCM recently examined the current conditions of competition in the construction industry to identify any competition concern that may locally be present. The findings revealed that the various markets within the construction sector are highly concentrated and the major players of the sector are vertically integrated across the supply chain. The prices of construction materials were found not to be subject to regulation and were determined by the market players. Contractors and consultants are legally required to be registered with the Construction Industry Development Board. Some of the concerns raised by the stakeholders were related to the restrictive effects of government-to-government contracts for local contractors and the disparity of working conditions between the local and international contractors.
Enhanced detection of cartels
In recent years, the CCM has time and again shone the spotlight on its leniency programme in detecting other forms of collusion. The programme aims to incentivise cartelists to inform the CCM on their cartel activity in exchange for total immunity from financial penalties or discounts going up to 100 per cent of financial penalties.
Since leniency was not available for cartel initiators, the CCM has run time-limited amnesty programmes for cartel initiators on two occasions, in May 2012 and May 2017. The amnesty for cartel initiators allowed enterprises that have partaken in a cartel to benefit from a reduction in fines when they disclose the cartel to the CCM. The above initiative allowed the CCM to gain much greater insight on cartels.
Since the beginning of 2018, the CCM has amended its Guidelines on Collusive Agreements to specifically allow cartel initiators to benefit from leniency. From now on, cartel initiators may receive an up to 50 per cent discount on financial penalties if they are first to disclose cartel activity to the CCM.
For the purposes of enhancing enforcement, resale price maintenance (RPM) has also been taken into consideration. More specifically, trading practices across certain local industries may well have established RPM as part of normal supplier–reseller negotiations with either limited understanding of the competitive harm resulting thereof or little risk that the business partners would want to defect and inform the CCM at the expense of their commercial relationship.
The CCM launched a special amnesty for RPM in June 2017 offering time-limited immunity to any enterprise involved in RPM. The aim of the programme was to cease RPM conducts in order to restore competition rather than sanctioning the said conducts. The programme offered immunity to enterprises that reported their RPM conducts and undertook to change such practices.
The programme was run in close collaboration with the Mauritius Chamber of Commerce and Industry (MCCI), which disseminated information on the programme to assist enterprises in complying with the act and avoid potential financial penalties. The MCCI further acted as a facilitator on the programme and provided assistance in the application process for both its members and non-member enterprises.
Targeted workshops with various stakeholders, including, but not limited to, suppliers and resellers were organised to raise awareness on RPM and the amnesty programme.
Pursuant to the RPM Amnesty Programme ending on the 20 October 2017, 103 applications were received in total, from all over Mauritius. Sectors included fast-moving consumer goods, construction, manufacturing, electronic goods, IT products, books, pharmaceuticals and cosmetic products. Applications from suppliers (including large distributors, wholesalers, importers and manufacturers) and resellers were 55 per cent and 45 per cent respectively. The RPM Amnesty Programme was a successful endeavour as many more enterprises were made aware of RPM conduct as well as being provided with a unique opportunity to redress their commercial transactions and ensure compliance with the RPM provisions of the act without incurring any financial liability for past or current involvement in RPM agreements or conduct.
As regards the above leniency and amnesty programmes, the beginnings of a more compliance-based culture can be seen.
The CCM has continued to reinforce a competition culture in Mauritius through its various advocacy initiatives targeting, among others, public officials, consumer associations, the legal profession, accountancy firms and the business community in general.
Cognisant of the important role that accountancy firms play in mergers and acquisitions, the CCM has embarked on a series of workshops to increase awareness on merger control provisions in the Competition Act. These workshops are being conducted with major accountancy firms to highlight the importance of factoring the provisions of the Competition Act while advising on mergers and acquisitions and dealing with administration and the receivership of companies.
As part of its advocacy initiative – and, more particularly, in its endeavour to fight collusive practices in public procurement – the CCM has embarked on a continuous programme to sensitise procurement officials on the relevant provisions of the Competition Act. The key objective is to provide government officials, engaged in tender designs and processes, with key notions pertaining to bid-rigging practices among suppliers that would constitute offences under the provisions of the Competition Act. This initiative also serves as an information-sharing platform between procurement officials and the investigative staff of the CCM in the detection of potential bid-rigging cases.
In collaboration with the Institute for Judicial and Legal Studies of Mauritius, the CCM has shared perspectives on abuse of dominance provisions with barristers and other law practitioners. The primal importance of economics was stressed upon. Basic knowledge of would-be abstract concepts such as the definition of relevant markets and the assessment of market power and of competition itself was shared, and to pique the interest of the audience, simple yet effective real-life examples were used. The objective was to enable practitioners to recognise the needs of their clients in terms of competition law.
The Competition Commission conducted a series of interactive sessions with various ministries, regulators and consumer associations. The purpose of these sessions was to raise awareness on the provisions of the competition law and to disseminate the enforcement works of the Competition Commission. These interactive sessions also served as a platform to discuss potential competition issues that the different stakeholders may be facing or be aware of. The sessions with senior official of ministries were meant to discuss the importance of competitive assessment in policy making.
Revamping the competition law
Over more than eight years of competition enforcement, the CCM has been able to gauge the effectiveness of the provisions of the Competition Act and to identify its potential shortcomings and areas that need reinforcement. In an attempt to remedy these shortcomings, adequately cater for emerging competition issues and be in line with international good practices and other regional commitments, the CCM is undertaking a review of the monopoly and merger regimes and their ensuing guidelines. Some changes are also being considered for cartels.
As regards cartels, the CCM wishes to introduce a settlement mechanism whereby parties will be able to settle cases in return for discounts in financial penalties. Currently the CCM has a leniency policy that is working fairly well. It is believed that the settlement procedure is likely to lead to quicker resolution of cases. The CCM is likely to benefit from a shorter, quicker administrative process and a reduced number of appeals to the court. It will enable the commission to handle more cases with the same resources, thereby fostering public interest in the commission’s delivery of effective and timely punishment, while increasing overall deterrence.
The CCM is exploring the notion of introducing fines for abuse of monopoly cases. Mauritius is among the very few countries that do not impose financial penalties for abuse of monopoly situations. The CCM can only impose a remedy and this may not have the desired deterrence effect. It has been observed that some enterprises have been investigated several times under monopoly provisions. This may clearly indicate that these enterprises have not been deterred from reiterating their conduct.
It is a fact that there is no incentive for businesses to collaborate and can thus be involved in recidivism. This is because they know that they will only be requested to amend their practice after an investigation has been completed.
Moreover, the CCM is proposing to introduce mandatory notification of mergers. Unlike other jurisdictions, most mergers in Mauritius are concretised without prior assessment by the Competition Commission.
The Competition Act does not currently obligate that enterprises intending to be party to a merger notify the CCM of the proposed transaction. The CCM has come across various mergers that have not been notified to the CCM for various reasons. With the present law, there exists significant risks that there may be several mergers that impede competition but are unnoticed by the CCM.
It is therefore being considered that Mauritius shifts to a mandatory merger notification regime, subject to the merger meeting a certain threshold. A mandatory regime may be beneficial in terms of ensuring a standard policy for all mergers that would lead to certainty. Among others, it may also avoid the cost of unscrambling consumed mergers, balancing the cost of the review between merger parties and tax-payers, and expediting the review process.
All the above amendments are aimed at making the Competition Act more effective and better equipped to tackle restrictive business practices in a more vigorous manner, for more efficient markets, to the ultimate benefit of consumers and the economy at large.
The CCM has already appointed a high-level consultant from the UK to conduct the review. Consultations and working sessions on the review have begun and the whole review process is to be completed in 2019.
A major part of the consultant’s mandate is to draw up detailed guidelines on the amended sections of the law that will eventually be officially published by the CCM. The COMESA Competition Commission is assisting the CCM in this endeavour to come up with proposed amendments. Once the consultant has submitted the report, the new amendment bill will be sent to the relevant authorities and to the parliament to be passed as amendments to the Competition Act.
In view of promoting collaboration and the exchange of information, the CCM has entered into MOUs with various sector regulations. This is also an effective way to promote cooperation between institutions at a national and international front.
Over the years, the CCM has valued cooperation with local sector regulators. To formalise a working relationship between regulators in Mauritius, formal MOUs have been signed with entities such as the Independent Commission Against Corruption Mauritius, the Mauritius Revenue Authority, the Information and Communication Technologies Authority, the Public Procurement Office, the Bank of Mauritius, the Financial Services Commission and the Ministry of Renewable Energy and Public Utilities. This has proved to be an efficient means of facilitating collaboration and sharing information over enforcement activities of the CCM.
The CCM also values cooperation with international regulatory bodies and sister competition agencies, and has formalised the same through the signing of MOUs. The formalisation of this working arrangement between institutions has entrenched cooperation between the sister agencies to deal with anticompetitive conducts and to build internal enforcement capacity.
As such, cognisant of the long-term objectives of Mauritius to foster regional trade, the CCM signed an MOU with the CCC on 24 March 2017. The signing ceremony was held at the Voila Hotel in Bagatelle, where heads of no less than 10 African competition authorities had convened for the event. Prior to the signature of the MOU, the CCM had already cooperated with the CCC on 30 merger notification cases. This MOU adds to existing ones the CCM has with the competition authorities of South Africa, France, Seychelles Fair Trading Commission and Southern African Development Community member countries.
While previously Mauritius has received assistance from various competition authorities, the CCM recently extended technical assistance in the form of training programmes to the Conseil de la Concurrence de Madagascar, the Trade Competition and Consumer Protection of Ethiopia and the Democratic Republic of Congo even in the absence of a formal MOU with the aforementioned entities. The training programmes covered the various aspects of competition law enforcement (ie, abuse of dominance, collusive agreements and mergers) as well as the institutional structure and operating procedures of the CCM. Insights were also shared on the CCM’s experience of conducting market studies and advocating for competitive markets.
In 2016, the CCM started its second mandate as co-chair of the African Competition Forum (ACF). As a member of the ACF, the CCM has contributed to the ongoing cross-country sectorial market study. The aim of carrying out such studies is to evaluate the competitiveness of specific economic sectors of participating member agencies. In this context, the CCM conducted a market study into the construction industry in Mauritius. The study aimed at understanding the current conditions of competition across the different market and sub-markets in the construction sector to enable the identification of competition concerns, if any. The scope of the study covered the review of the market structure, pricing, regulatory framework (permits, norms and standards), state support and public procurement.
The CCM has clearly ramped up its efforts in the detection of collusive agreements in recent years, with success. Enforcement has increased and the CCM is positive that the business community at large is now profoundly aware of the harm collusive agreements may cause and, more importantly, the dire consequences they may face if they are caught contravening the law. With the awareness that has been created, the CCM intends to pursue horizontal cases with the full force of the law.
Another area of activity the CCM expects will grow is that of cross-border cooperation. As a small island economy, the CCM suspects that Mauritius often suffers the harm caused by cross-border cartels, mergers and abuse of dominance. For obvious jurisdictional reasons, it will not be able to probe those suspicions on its own. Thus the need to foster deeper ties with regional competition authorities to detect and deter such practices if they do exist.
Amending the competition law framework has become a self-evident prospect. Highlights are likely to include the inclusion of financial penalties for abuse of dominance, the introduction of exemption regimes and institutional changes in favour of clearer responsibilities. With those changes, the CCM will be equipped with new tools which, along with its experience, will enable it to ensure higher levels of deterrence and compliance.
Over its first nine years, the CCM has laid a solid foundation for competition law enforcement and will continue to do so in the coming years. It is confident that with the revamping of the competition law, cooperation with sister competition authorities and the continuous sharpening of its enforcement tools, strategies and resources, it will keep driving its mission to promote competition in the interest of consumers, businesses and the Mauritian economy.