Mauritius: Competition Commission
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Founded in 2009, the Competition Commission of Mauritius (CCM) is nearing its first decade of existence. 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 nearly 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 220 pre-investigations and 42 investigations inclusive of merger, abuse of monopoly and cartel cases. With a total of 195 pre-investigation cases and 31 investigations completed, an overview of the most recent cases led by the CCM is provided next.
Since 2009, the CCM has undertaken around 39 pre-investigations and completed five investigations in relation to merger transactions. 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 58 mergers notified to the CCC covering a range of sectors including healthcare, retail, automotive, logistics, agro-industry sectors among others. In one instance, the CCM sought to refer the case to Mauritius because Mauritius was concerned that the transaction had a material scope in relation to it.
Pursuant to the attunement of the CCM to occurrences in the Mauritian economy, the following transactions have recently been reviewed.
The CCM assessed the proposed acquisition of 51 per cent of the issued shares of Medscheme (Mtius) Ltd (Medscheme) by Swan General Ltd (Swan). Medscheme and Swan jointly applied for the guidance to the CCM in relation to the proposed transaction. Swan is an insurer lisensed to provide general insurance including health insurance. As part of its health insurance product offering, Swan also manages the healthcare insurance claims of its clients. Medscheme is an administrator of medical insurance and provident funds. It manages healthcare insurance claims and the associated processes of local and international client portfolios, employer medical aids and a number of provident fund associations.
Following a preliminary review (equivalent to Phase I review), the case proceeded to in-depth review. At the issuance of the Statement of Issues report, the CCM expressed its preliminary competition concerns in relation to the transaction in various markets to the parties. However, shortly after the Statement of Issues, the parties abandoned the proposed transaction, and as a consequence the investigation was discontinued with no further action in July 2017.
In August 2017, the CCM launched a pre-investigation into the potential acquisition by IBL Ltd through Winhold Ltd (operating as Winner’s supermarket chain) of 91 per cent of the shares in Compagnie des Magasins Populaires Ltee (operating as Monoprix supermarket chain). IBL Ltd is a conglomerate group that is vertically integrated in the fast-moving consumer goods sector. Both acquirer and target operate supermarkets in Mauritius. The CCM was concerned that the acquisition may lessen competition given that Winner’s, as one of the leading supermarkets in Mauritius, was pursuing the acquisition of a competitor. However, following an assessment, it was found that the risk of competition concerns was not significant either at national level or more confined regional geographic markets.
The CCM also investigated the merger of two independent suppliers of cement, Holcim Ltd and Lafarge SA, in 2014. During the course of the investigation, Holcim Ltd and Lafarge SA offered undertakings to the CCM to dispose of their shares in Holcim (Mauritius) Ltd. The transaction was cleared on December 2015.
Given the voluntary merger notification regime, since January 2018, the CCM has devised new tools and mechanisms to detect mergers occurring in Mauritius. As a result, the CCM is currently analysing more than 1,000 transactions that occurred in the past year to scrutinise if there have been any merger transactions that may impede competition and consequently require the intervention of the CCM.
Abuse of dominance
The CCM has been engaged in the review of a total of 113 abuse of monopoly cases where 18 resulted to investigations. Out of the 18 investigations, the CCM has completed 16 of them. The outcome of the investigations varies between infringement decisions, imposition of remedial measures and undertakings offered by the parties.
The most recent investigation completed relates to merchant discounts charged by CIM Finance Ltd whereby the latter has offered 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 rest two of the investigations are presently 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 the 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 which 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 had 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 has been 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 has shown 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 has 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 investigation into payment cards. The investigation, launched in 2012, concerns the set of agreements that Visa and MasterCard have 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 level 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 effected using cards issued by them. They are, thus, 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 in relation to 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. The CCM has completed nine cartel investigations since 2009 to date. Of the 43 pre-investigations conducted, 27 were closed and 16 have been progressed to 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. The commissioners have imposed record fines of 29 million Mauritian rupees on Panagora. This case is presently on appeal before the Supreme Court and the dispute is in relation to the CCM’s findings for the Panagora case is still on-going. The latter’s arguments focused mainly on the absence of ‘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.
Advice to government
The law provides for the CCM to advise the government on any of their 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 four pieces of advice to government on various policy decisions in relation to the sugar, cement, scrap metal and cattle sectors in Mauritius.
The last advice concerned minimum restrictions on the importation of cattle in Mauritius. The CCM gathered that the aim of government in imposing such restriction was to secure adequate sanitary and phytosanitary conditions that would mitigate the risks of foot and mouth disease outbreak on top of the existing conditions. The fact that stringent conditions were already in place with regards to the sanitary and phytosanitary conditions, the CCM found that such policy was acting as a barrier to entry and has adversely affected competition in the supply of slaughter cattle for the ‘qurbani’ festival in Mauritius. The CCM suggested that the concerned ministry remove any quantitative restriction and consider adopting other measures such as the vaccination of imported cattle prior embarkation to Mauritius.
Another recent piece of advice arose from the government’s decision to ban the export of scrap metal. The ban on export of scrap metal was likely to affect the conditions of competition and eventually the competitiveness of the scrap metal industry. The recommendation was that the ban should be lifted.
By way of the advices to government, the CCM tries to always keep abreast of the state policies that might as well adversely affect competition.
In addition to providing advice to the government, the CCM is also mandated to undertake general studies on the effectiveness of competition in individual sectors of the economy in Mauritius. During its years of existence, the CCM has conducted four market studies. Two of them were related to the cement sector and saw the liberalisation of market. Another completed market study is related on a broader perspective to the construction industry and the fourth market study is ongoing. It focuses on the pharmaceutical industry in Mauritius.
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. 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 the past years, the CCM has, time and again, shone the spotlight on its leniency programme in detecting other forms of collusion. The programme aims at incentivising 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, which have initiated 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 year 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 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 has 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 which 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 to be compliant 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, emanating from across Mauritius. The sectors include the fast-moving consumer goods, construction, manufacturing, electronic goods, IT products, books, pharmaceutical and cosmetic products. Applications from suppliers (which include large distributors, wholesalers, importers and manufacturers) and resellers were 55 per cent and 45 per cent respectively. The RPM Amnesty Programme has been a successful endeavour as many more enterprises were made aware of an RPM conduct as well as were 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 an RPM agreements or conduct.
With regards to the above leniency and amnesty programmes, the beginning of a more compliance culture is being seen.
With a declining rate of complaints coming in from the public, the CCM has raised significant resources to foster awareness among the legal profession and business community, in particular trade associations, over the past years. The leitmotiv is of course that of encouraging self-compliance on the part of businesses.
Beginning February 2016, the CCM has embarked on a series of workshops aimed at Trade & Professional Associations (TPAs) and major operators across various economic sectors. Combining competition law theory with industry-specific hypothetical scenarios, the half-day TPA-dedicated workshops were focused on drawing participants’ attention to the relevance of the Competition Act to certain practices and agreements of trade associations and their members while enumerating simple yet useful safeguards which may be placed during a trade association meeting or discussion for ensuring compliance with the Competition Act.
The advocacy programme reached around 100 participants from more than 20 trade associations in the tourism, construction, food retailing, IT, agro-industry, healthcare, media and communications as well as the financial services sectors.
In terms of its advocacy programmes, the CCM has continued the reinforcement of instilling a competition culture among the legal profession and business community in general.
Further to the conduct of a series of workshops aimed at trade and professional associations (TPAs) and major operators across various economic sectors, the CCM held a workshop targeted to journalists and media professionals. It aimed to foster media understanding and enable business reporters to attract fresh enthusiasm from their audience. The half-day working session provided an introduction to the value which competition law enforcement can hold for business reporters and their audience. Participants were exposed to selected competition cases that have made huge impact worldwide and a few cases from Mauritius. Emphasis was placed on how those cases brought benefits to the consumers and could thus provide interesting stories for coverage by the media.
Moreover, in line with its advocacy policy of creating competition awareness among the public in general, the CCM has also been publishing articles in the local newspaper Defi Plus on a weekly basis in relation to competition.
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 those shortcomings and in order to adequately cater for emerging competition issues and be in line with international good practices and other regional commitments, the CCM is presently undertaking a review of the monopoly and merger regimes and their ensuing guidelines. Some changes are also being considered for cartels.
With regards to 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 the public interest in the commission’s delivery of effective and timely punishment, while increasing overall deterrence.
The CCM is exploring the possibility of introducing fines for such abuse of monopoly cases. Mauritius is among the very few countries which 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 enterprises which intend to be party to a merger situation to notify the CCM of the proposed transaction. The CCM has come across various mergers which have not been notified to the CCM for various reasons. With the present law, there exists significant risks that there may be several mergers which 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 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, balance the cost of review between merger parties and tax-payers and expedites the review process.
All the above amendments will be 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 is currently in the process of appointing a high-level consultant conversant with competition law and economics, to conduct the review. Among others, the consultant will have to consider best practices in competition policy around the world and also will have to assess the specific local context to formulate the best mechanism and policy in relation to areas requiring improvements.
The CCM aims to complete the review in 2018. A major part of the mandate of the consultant will be to draw up detailed guidelines on the amended sections of the law which will eventually be officially published by the CCM. The COMESA Competition Commission is assisting assist the CCM in this endeavour to come up with the 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 exchange of information, the CCM has entered into MOUs with various sector regulations. This is also an effective way to promote cooperation between institutions both at a national and international front.
Over the years, the CCM has valued cooperation with local sector regulators. To formalise working relationship between regulators in Mauritius, formal MOUs have been signed with entities such as the Independent Commission Against Corruption Mauritius (ICAC), Mauritius Revenue Authority (MRA), Information and Communication Technologies Authority (ICTA), Public Procurement Office (PPO), Bank of Mauritius (BOM), Financial Services Commission (FSC) and Ministry of Renewable Energy and Public Utilities. This has proved to be an efficient means of facilitating collaboration and sharing of 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 such working arrangement between the 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 a 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 the existing ones that the CCM has with the competition authorities of South Africa, France, Seychelles Fair Trading Commission and Southern African Development Community member countries.
While in the early years Mauritius has been recipient of assistance from various competition authorities, the CCM has recently extended technical assistance in the form of training programmes to the Conseil de la Concurrence de Madagascar, Trade Competition and Consumer Protection of Ethiopia and the 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 (abuse of dominance, collusive agreements and mergers) as well as the institutional structure and operating procedures of the CCM. Insights were also shared on CCM’s experience in 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 the participating member agencies. In this context, the CCM has 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 detection of collusive agreements over recent years. These have been successful. Enforcement has increased and the CCM is positive that the business community at large is now profoundly aware of the harm that collusive agreements may cause and more importantly, of the dire consequences they may face if they are caught contravening the law. With the awareness which has now been created, the CCM intends to pursue horizontal cases with the full force of the law.
Another area of activities which 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 for fostering 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.