On 1 July 2024, the Minister of Trade and Industry in Malawi gazetted the notice bringing into effect the new Competition and Fair Trading Act No. 20 of 2024 (the "New Competition Act"). The New Competition Act repeals the previous Competition and Fair Trading Act No. 43 of 1998 (the "Old Competition Act").
The Competition and Fair Trading Commission of Malawi ("CFTC") has stated that the New Competition Act is aimed at filling the existing gaps not addressed by the Old Competition Act and enhancing effective enforcement.
We discuss some of the major changes below.
As regards merger control, some of the notable changes include the following:
- Part IV of the New Competition Act changes the regime from non-suspensory/voluntary to a suspensory regime which requires transactions to be notified, and approved, prior to implementation. This change in the merger control regime will certainly result in more transactions being notified to the CFTC for consideration and approval which would have otherwise been implemented without effective oversight from the CFTC. It will be interesting to see how this process unfolds in due course.
- With the change from non-suspensory to suspensory merger control regime comes the potential introduction of prescribed financial merger thresholds which may be published by the Minister of Trade and Industry (the "Minister") upon recommendation by the CFTC. There are currently no prescribed financial merger thresholds in force.
- In line with antitrust trends in other jurisdictions, the New Competition Act also introduces a public interest test which is to be applied by the CFTC to determine whether a proposed merger can or cannot be justified on substantial public interest grounds. This test involves assessing the effect that the transaction will have on,inter alia, a particular industrial sector or region, employment, and the saving of a failing firm.
Seeking to bolster the existing anti-competitive practice provisions, the New Competition Act brings in the following amendments:
- Section 26(2) read with section 26(6) introduces the notion of a "per se" prohibition in respect of vertical agreements which involve minimum resale price maintenance. Such agreements will be automatically and absolutely prohibited in all circumstances such that it will not be necessary for the CFTC to demonstrate any anti-competitive effect and thus no defence may be put forward by the offending parties to justify their conduct.
- The CFTC can now conduct a market study or a market inquiry where it has reasonable grounds to suspect that an unfair trading practice, or a prevention, restriction or distortion of competition is occurring.
The New Competition Act now also gives the CFTC greater enforcement powers including,inter alia, in the form of an express ability to issue administrative orders, grant interim orders and authorise (exempt) anti-competitive practices.
A more general observation with respect to the amendments in the New Competition Act is the specific mention of digital products and accompanying references throughout such as by way of an expanded definition of "turnover" to include "the amounts accrued from the sale of goods, digital products or services". Given the digital and technological developments globally, this key feature shows the forward-looking mindset of the CFTC.
Businesses would be wise to monitor the investigations and decisions coming out of the CFTC from a merger and anti-competitive practice perspective over the next few months and ensure that they are compliant with the new regime.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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