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Nigerian Competition Commission Increases Cartel Conduct Enforcement

posted 2 years ago

The Nigerian Federal Competition and Consumer Protection Commission (“Commission”) has in the past year clearly dispelled any notion of it being perceived as primarily a merger control agency. The Commission has taken some significant strides in relation to investigating cartel conduct (i.e. price fixing, market allocation or collusive tendering). The Nigerian Act provides not only for administrative penalties but also creates a criminal offence for engaging in cartel conduct.

Following dawn raids conducted in the freight forwarding sector – which itself is a clear signal to firms conducting business in Nigeria that the Commission has the resources, investigative powers and ambition to investigate alleged collusive conduct – the Commission has also commenced an investigation into the domestic airline sector. The Commission alleges that certain domestic airlines had, ostensibly under the auspices of the Airline Operators of Nigeria (“AON”) (an industry association) engaged in price coordination. In particular, it is alleged that the respondents had agreed to increase the minimum “base fare” for domestic routes. Further, the respondents are also alleged to have engaged in discussions where their individual revenue management models and/or other commercially sensitive data may have been exchanged. Consequently, the Commission has, in collaboration with the Nigerian Civil Aviation Authority, launched an investigation into the matter.

Respondents are therefore likely to test the full remit of potential defences to avoid liability and the Commission is going to have to have to grapple with complex issues. One of these is likely to be the characterisation defence which antitrust authorities typically resist but which cannot be ignored. This is particularly so in the domestic airlines case where increased costs and regulatory failure may have been key factors in the respondents increasing their prices. The line between cartel conduct and independent commercial decisions in practice is not always as clearly identifiable as the legislature may contemplate.

Regardless, the investigation into the airline sector again highlights the risks associated with dealing with competitors at industry or trade associations – particularly in circumstances where participants and members continue to engage at these meetings as they did prior to any competition laws being in place. It is important that not only firms operating in Nigeria but that trade associations themselves also familiarise themselves with good competition law compliance and ensure that there is a clear grasp of what type of information may be exchanged at industry associations and for what purpose and what types of information exchanges are absolute red flags. It is also important to ensure that there are proper mechanisms put in place to collate, aggregate, and disseminate commercial information on behalf of the industry which does not lead to problematic information exchanges between competitors. The risks to both the members and the organisation are too significant to ignore.

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