A recent survey conducted by pan-African law firm Bowmans revealed the risk of non-compliance with African competition law regimes was the top compliance concern of businesses operating in Africa.
Bowmans surveyed in-house legal teams in large businesses in Africa on what they considered to be their biggest compliance risks when transacting across the region.
While the risk of non-compliance with competition law topped the list, businesses also expressed concerns regarding compliance with privacy and data protection laws, as well as the myriad of sector-specific regulations across African jurisdictions.
Tamara Dini, co-head of competition at Bowmans, said competition compliance emerged as the top compliance risk was consistent with their observation of the growing drive in the adoption and enforcement of competition laws in Africa.
“Given the increasing implementation of competition regulation and the spread of awareness of competition laws, the risks of detection and prosecution of offending conduct are greater,” Dini said.
Of the 54 countries in Africa, more than 80% had national or regional competition legislation in place and around half had active competition regulators.
Dini said 69% of the in-house legal teams participating in their survey indicated that they have had some form of interaction with a competition authority in the past 12 months.
The survey found that most legal teams dealt with competition compliance across multiple African jurisdictions - more than 15 jurisdictions, in some cases.
Bowmans consultant, Shakti Wood, said managing compliance across multiple jurisdictions could be challenging.
“While there are commonalities in the principles underpinning competition laws, these laws can be varied and disparate. Compounding this, employees, customers, suppliers and competitors in different jurisdictions may have differing understandings of competition laws and accepted conduct,” Wood said.
Highlighting this was the finding that 45% of respondents were not confident that their employees adequately understand the competition risks that were attached to their day-to-day jobs.
Wood said for that reason, there were high levels of concern that employees may inadvertently engage in activities that contravened competition laws.
This was despite the existence of competition compliance policies within all the organisations surveyed and the prevalence of awareness and training programmes.
She said competition laws and issues could be complex and it was unrealistic to expect that a competition awareness programme would transform employees into competition experts.
The firm said the most effective compliance programmes were simple and relevant, readily accessible, appropriately targeted, offering impactful training and supported by a culture of compliance.
Wood said this was an environment where employees were able to raise concerns with senior management and/or legal staff without fear of negative repercussions.
“Furthermore, employee performance incentives should not undermine incentives to conduct business in a compliant fashion.”
However, many respondents indicated moderate to low incentives to report potentially problematic activity. Only 31% believed their organisations had adequate structures and processes to detect and report competition risks.
In detecting and addressing compliance risk, an interesting development was the use or planned use of technology. While just over 40% of companies surveyed said they had no plans to use technology in compliance, most were heading in this direction but were generally still in the early stages.
While the Bowmans survey revealed several areas where companies could improve their competition compliance, it said this needed not be an unduly costly undertaking.
Dini said certain low-effort and low-cost changes could positively affect the impact of a compliance programme. She said examples were clearly spelling out the steps employees could take to obtain assistance on competition issues and ensuring that the appropriate reporting lines were in place.
Dini also recommended that organisations tap into the input of their employees.
“Some of the best input in crafting an awareness programme may not come from the legal team, but from teams within an organisation sharing the issues that they regularly encounter.”
She said that the legal firm initiated this compliance survey to understand their clients’ particular challenges in Africa and provide insights on managing competition compliance risk.
“Knowing what our clients find challenging in Africa allows us to readily assist them to overcome these complexities and unlock the many opportunities available to them in Africa,” Dini said.
Earlier this month, the Deputy Minister of Trade, Industry and Competition, Zuko Godlimpi, urged competition authorities to prioritise enforcement in sectors critical to industrialisation and growth.
Godlimpi also highlighted the role that competition authorities can play in addressing this challenge.
“By focusing on preventing anticompetitive practices and curbing harmful mergers, competition policy can continue to contribute towards lowering the costs of essential goods and services, which is particularly important for vulnerable households,” he said.
BUSINESS REPORT