President Muhammadu Buhari signed into law, the Federal Competition and Consumer Protection Act 2019 (the “Act”) on Tuesday, 5 February 2019. This is a laudable achievement as it is the first comprehensive competition law in Nigeria.
The Act applies to all undertakings and all commercial activities within or having effect within Nigeria. The Act also applies to conduct outside Nigeria by a citizen of Nigeria or a person resident in Nigeria in relation to the acquisition of shares or other assets outside Nigeria resulting in the change of control of a business, part of a business or any asset of a business in Nigeria.
The objectives of the Act include, but are not limited to –
- The promotion of competitive markets in the Nigerian economy;
- The protection and promotion of the interests and welfare of consumers by providing consumers with wider variety of products at competitive prices; and
- The prohibition of restrictive or unfair business practices which prevent, restrict or distort competition or constitute an abuse of a dominant position of market power in Nigeria.
The Act establishes the Federal Competition and Consumer Protection Commission (“Commission”) to administer and enforce the Act and the Competition and Consumer Protection Tribunal to adjudicate over disputes arising from the operation of the Act.
It is important to note that the Act has repealed the provisions of the Investment and Securities Act relating to merger transactions (effectively stripping the Securities and Exchange Commission (“SEC”) of its power to approve mergers) and places the responsibility of approving merger transactions on the Commission. When considering a merger or a proposed merger, the Commission is empowered to determine whether or not the merger is likely to substantially prevent or lessen competition.
Please note that according to a circular released by the SEC on 8 February 2019, there is a transitional period of three (3) months for the Commission to become operational. It is our expectation that companies and businesses in the public and private sector will very shortly, begin to feel the impact of the Act on their operations.
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