SB 257: Federal Competition Bill, 2016

Bill Analysis:

SHORT TITLE

Federal Competition and Consumer (FCC) Protection Bill, 2016

OBJECTIVES OF THE BILL

The objectives of the Bill are as follows: -

• Establish the Federal Competition and Consumer Protection Commission;
• Establish the Federal Competition and Consumer Protection Tribunal;
• Promotion of fair, efficient and competition markets in the Nigerian economy, facilitate access by all citizens to safe products; and
• Repeal the Consumer Protection Act, CAP. C25, LFN 2004

NUMBER OF CLAUSES/PARTS

The Bill has 18 parts and 170 clauses, including the interpretation clause

CONTENTS

The Bill has the following contents: -

• Establishment of the Federal Competition and Consumer Protection Commission, staffing and funding of the Commission
• Establishment of the Consumer Protection Tribunal
• Power of the Commission to investigate monopoly; Regulated industries and Consumer rights
• Dominant position and its abuse
• Duties of Manufacturers, importers, distributors and Suppliers of goods and Services.
• Deletion of relevant sections of the Investment and Securities Act (ISA)
• Enforcement of Consumer Rights

IMPLICATIONS OF THE BILL

1. Promoting Fair Competitive Practices: - The Bill seeks to promote the interests and welfare of consumers by providing competitive prices and product choices. It will create the environment for competition in the economy and provide opportunities for private sector investment, which would promote economic efficiency and prohibit restrictive business practices that distort competition. Finally, it would protect small businesses from dominant practices of bigger and more powerful corporations.

2. Repealing the Consumer Protection Council (CPC) Act 1992: - The current Consumer Protection Council will cease to exist and the Federal Competition and Consumer Protection Commission (The Commission) will replace it. Under Clause 166 (3) & (4) of the Bill, all assets, funds, resources and other immovable properties of the CPC will be vested in the Commission. The Bill, by seeking to repeal the existing Act and establish a new Commission with an expanded mandate of promoting market competition and anti-monopolistic regulation, is adding another arm/department to the CPC (which will now be a Commission) to carry on this expanded mandate.

3. Approval of Mergers and Acquisitions: - Clause 17(1)(k) provides that the Commission can authorize, prohibit or approve mergers which is a function already being performed by the Securities and Exchange Commission (SEC) in accordance with the provisions of the Investment Securities Act (ISA), 2007.

4. Establishment of the Competition and Consumer Protection Tribunal:-The Tribunal is established under Clause 39(1) of the Bill and decisions by the Commission can be appealed at the Tribunal. The decision of the Tribunal can be registered at a Federal High Court for enforcement and the decision of the Tribunal can be reviewed also at the Federal High Court. The Tribunal under Clause 48(1)(b) will be empowered also to hear matters from any other regulatory authority in respect of competition and consumer protection. However all requests and appeals from these regulatory authorities shall be heard by the Commission before the appeal can be determined by the Tribunal.

5. Consumer’s Right to Return Goods: – Under Clause 123(a) & (b), the consumer retains the right to return goods to the supplier “within a reasonable time” after delivery. The Bill did not define the term ‘reasonable time’. A consumer may need to agree with the seller on a suitable reasonable time to return goods that are damaged or fall below the specification of the manufacturer.

6. Remedy to the Consumer: - A consumer may seek to enforce their rights in accordance with Clause 147 by referring the matter to the supplier or manufacturer of the goods or service; referring the matter to the industry sector regulator with jurisdiction; filing a complaint to the Commission or approaching a court of competent jurisdiction. The consumer may in addition to the redress which the Commission shall impose, file a civil action in a court of competent jurisdiction to seek restitution or compensation in accordance to Clause 153(b)

7. Onus of Proof: - Clause 146 of the Bill provides that it shall be the responsibility/duty of the supplier/seller to prove that the goods or services provided to the consumer are not defective.

8. Quality of Goods and Services: - The Bill also provides in Clause 132 for the consumer’s right to good quality goods and a timely performance of a service requested by the consumer or a timely notice of inability to perform or unavoidable delay. This means that goods supplied have to be in good condition and must not be damaged, as the buyer reserves the right to return. In the same vein, a service provider is required under the Bill to provide the service at the agreed time or give “timely” notice of any avoidable delay. The word “timely” is not defined in the Bill.

9. The Three-Month Window for Return: - Under Clause 133(2) the Bill requires that within 3 months after the delivery of goods, they can be returned with no penalty, at the risk and expense of the undertaking that supplied them, if they are damaged, not in good condition or below specified standard. In situations where contents of goods are misrepresented or are not of a certain quality or are damaged, the buyer has the right to return the goods to the seller for replacement, refund or repair.

10. Failure to Perform a Service: - Clause 131(2) stipulates that where the service provider fails to perform the service to standard, the buyer or consumer has the right to demand for the remedy of any defect in the quality of service provided or a refund up to a “reasonable portion” of the price paid for the services performed. What percentage is represented by “reasonable portion” is not specified.

11. Prohibited Agreements: - Decisions by manufacturers or sellers or their associations regarding goods and services that may likely prevent, restrict or distort competition are void and of no legal effect. Such decisions or agreements may be to directly or indirectly fix prices or divide markets by allocating customers, suppliers or territories, and limiting or controlling production to drive prices up. However, decisions or agreements by sellers or manufacturers in this light that are authorized by the Commission shall be legal.

12. Prohibition of Abuse of Dominant Power and Monopoly: - The Bill prohibits the use of economic strength or power to prevent effective competition under Clause 73 of the Bill. The Bill also prohibits “exclusive dealings” under Clause 73(5)(b) which restricts a seller/supplier from supplying a class or product or service to others except a specific buyer/purchaser as a condition for business. Clause 77 provides that the Commission shall investigate any monopoly situation in relation to production or distribution of goods.

13. Disclosure of Price of Goods and Services: - The Bill under Clause 116 provides that a seller/supplier shall disclose the price of any displayed goods for sale or services to be provided. A price is adequately displayed if there is a written indication of the price, expressed in the currency of the Federal Republic of Nigeria, affixed or annexed to the goods or services.

14. Collaboration with Civil Society Groups: - The Commission under Clause 152 may collaborate with any civil society groups to promote consumer rights as well as hear any complaints regarding any matter specified within the Bill. An accredited consumer protection group may undertake any act to protect the interest of consumers individually or collectively. The Commission may accredit a consumer protection group if it functions to promote or represent the interest of consumers. The Commission shall also monitor the effectiveness of such accredited consumer protection group.    

15. Failure to Comply: - Any individual found liable for abuse of dominant powers, on conviction is liable to up to 3 years imprisonment or a fine up to N50million or both. For a corporate entity, Clause 75 provides for a fine of up to 10% of the turnover in the preceding business year or to such higher percentage as the court may prescribe. A court can also issue a ‘compensation order’ to a convicted corporate body to pay compensation for any personal injury, loss or damage resulting from that offence.

16. Supremacy of the Federal Competition and Consumer Protection Act:- Clause 105 provides that subject to the Constitution of the Federal Republic of Nigeria in all matters relating to competition and consumer protection, the Bill when passed into law shall override the provisions of every other law.   

17. Consequential Amendment of the Investment and Securities Act (ISA), No 29 of 2007: - The Bill also seeks to delete Sections 118 – 128 of the ISA under Clause 169. Repealing provisions of an existing Act requires an amendment to that Act. The Bill when passed into law would require that mergers, acquisitions and take-over be done with approval of the Competition and Consumer Protection Commission and no longer the Securities and Exchange Commission (SEC) as provided under the ISA.

18.      Compensation Order

Where a seller or supplier is convicted of an offence, the Court may in addition to dealing with such supplier or seller in any other way make an order requiring them to pay compensation for any personal injuries, loss or damage to the consumer up to an amount as it may deem fit or assessed by a competent professional authority. This constitutes the Court’s power to include additional sanctions where it deems fit.

19.      Right to information in plain and understandable language

The producer of any notice, document or visual representation is required to provide or display in plain and understandable language for the consumer. An ordinary consumer of the class of persons for whom the notice, document or visual representation is intended should be able to read, understand or comprehend the content of the notice or visual representation. This is to ensure that consumers clearly understand the content of a notice in order to avoid wrongful assumptions or errors in purchases.

20.      Conclusion by Industry Sector regulator

Where an industry sector regulator concludes that there is no reasonable probability of the parties resolving their dispute through the process provided by the industry code, the regulator may terminate the process by notice to the parties, and the party who referred the matter to the regulator may then file a complaint with the Commission. This Clause gives the complainer the right to move the matter to the Commission, should the industry regulator be unable to resolve it.

ANY SIMILAR EXISTING BILL

• The Bill is the exact replica of the Federal Competition and Consumer Protection Bill 2015 (SB 137) sponsored by Senator Nneji Athan Achonu
• The Bill is also similar Federal Competition Bill, 2015 (HB 01) sponsored by Hon. Yakubu Dogara (consolidated along with HB 60)
• The Federal Competition and Consumer Protection Bill 2015 (HB 60) sponsored by Hon. Abonta Uzoma Nkem (consolidated with HB 01)
• The Nigerian Trade and Competition (Est, etc.) Bill, 2016 (SB 206) sponsored by Senator Rafiu Adedayo Ibrahim

CONCLUDING ISSUES

A Federal Competition and Consumer (FCC) Protection Bill establishing a Commission for market regulation and protection of small businesses, to avoid monopolies and abuse of dominant market positions is a welcome development in Nigeria.

The Bill however seeks to assume a core function of the Securities and Exchange Commission (SEC) – approval of mergers, take-overs and acquisitions. Both Commissions can actually have concurrent jurisdiction over companies’ mergers and acquisition but with clear distinction on how to exercise their powers to avoid conflicts. The SEC may continue its statutory approval functions, while the FCC can hear matters relating to unfair practices or abuse of powers emanating from the process.

As Clause 169 seeks to delete sections 118 – 128 of the Investment and Securities Act (ISA) 2007, an amendment of that Act will be required. A consolidated Bill seeking to amend the ISA is presently before the House of Representatives but does not seek to repeal the said sections; this situation presents an opportunity for the House of Representative to include the sections in the amendment Bill as it progresses within the chamber.

Finally, there are two Bills before the Senate and a consolidated House of Representatives Bill similar to this Competition Bill, that the legislators need to consolidate before harmonization by both chambers. The importance of a Competition law in Nigeria cannot be over emphasized, especially in the present economic quagmire. There is a great need to expedite the passage of this Bill.

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