In as much as we all dislike competition, this quality is essential in the trade and business sector.
Lack of proper governance in the business sector results in unfair trade practices that include abuse of power, high prices, reduced quality and in the end the consumers being the general populace suffers the most.
To promote fair business competition, the Zimbabwean government promulgated the Competition Act [Chapter 14:28] (hereinafter the act) which sets out the rules and regulations for the interactions of entities in the businesses sector. The Act applies to all economic activities carried out within the borders of Zimbabwe.
The Act was enacted to promote and maintain fair competition amongst business entities.
This is achieved through provision of adequate control of all practices that are anticompetitive.
The control however does not absolutely limit the growth of competitors in the business sector, for instance two major entities in the food industry can merge however subject to conditions as recommended by the Competition and Tariff Commission so as to prevent the usurping of all consumers that would reduce competition in the market.
What are competition laws?
Competition is the process by which goods and services providers strive to gain the clientele base in ensuring increased sales, larger market shares and greater profits.
Sellers are more likely to attract and retain buyers if the quality of their goods or services is higher and the prices lower than those of their rivals, or if they are innovative in their production processes and marketing techniques.
Competition laws govern relationships between rival businesses, their suppliers, and their clients, criminalising uncompetitive and unfair trade practices.
They promote efficiency and business, giving consumers more options, lowers prices, and raising the caliber of consumer goods.
All these qualities in the business sector can either benefit or disadvantage the consumers; hence the ultimate objective of competition laws and policies is to ensure the attainment of economic growth for a nation ant large.
Section 2 of the Act defines unfair business practice as restrictive practice or other conducts that include misleading advertising, false bargain, distribution of goods or services above advertised prices, undue refusal to distribute goods or services, bid rigging, collusive arrangements between competitors, predatory pricing, retail price maintenance and exclusive dealing.
Competition laws are thereby set on one hand to enhance efficient functioning of markets and on the other hand protect consumers of goods and services.
The Competition and Tariff Commission
The Act prohibits acts that constitute unfair trade practices and these are restrictive practices that hinder fair competition among suppliers and retailers in the market.
That being the case, the Act establishes a Competition and Tariff Commission an independent body which is established to ensure that the goals of the Act are fulfilled. As the watchdog for competition laws in Zimbabwe, the Commission is again endowed with the power to regulate the business environment by undertaking investigations and reporting to the Minister of Industry and Commerce whenever they note illegal activity regarding tariff charges and unfair business practices and making an order over such activities.
Further, the Commission is expected to control economic and market structure so that markets function optimally.
The ambit of these powers also includes price control and monitoring. To strengthen the foregoing of the competition laws in Zimbabwe, the Commission is encouraged to constantly engage with other competition and tariff commissions from region and international jurisdictions so as to share and enhance knowledge ultimately adding to the economic development of nations
Remedies and consequences of contravening competition laws
According to section 44 of the Act, any person who is aggrieved by acts or agreements by either an individual or a market player which are anti-competitive has the remedy of approaching any court of law, either the Magistrates or High court depending on the value of damages incurred.
It is very important to avoid engaging in anti-competitive practices as such attracts heavy penalties and in some instances it may result in the removal of a player from the trading industry.
To be specific, section 42 of the Act provides for penalties to be imposed on persons or entities found engaging in anti-competitive practices.
If it is an individual, he or she will be liable to payment of a fine of an amount that is between ZWL 400 000 and ZWL 800 000 and failure to pay the fine results in imprisonment for a period that is less than 2 years.
In the event that a company or any other entity has contravened the provisions of the Act, it will be liable to a fine that is between an amount of ZWL 1 200 000 and ZWL 1 600 000.
According to Section 43 of the Act, any conduct or agreement or omission that constitutes an unfair trade practice or is entered into against the provisions of the Act shall have no legal force.
This means that in the event of any grievance, parties to such an agreement shall not have any remedy before court of law.
Conclusion
Companies and individuals in the economic sector are advised to be aware of the legal consequences of their business engagements and agreements and religiously abide by these competition laws.
Fungai Chimwamurombe is a registered legal practitioner and Senior Partner at Chimwamurombe Legal Practice and can be contacted for feedback at fungai@ zenaslegalpractice.com and WhatsApp 0772 997 889. Nontokozo Moyo is a legal intern. Email is moyonontokozo22@gmail.com, phone number +263 77 770 9303
