ECOWAS’s Regional Competition Authority and the Role of Supranational Organizations in Competition Law Enforcement

Ed Cullen

Vol. 41 Associate Editor

A challenge facing developing countries in joining and participating in the global economy is the effect of cartel and monopoly behavior on economic development. The creation of self-sufficient institutions to address these competition issues in developing countries is of central importance to development. The inefficiencies created by the unchecked perpetuation of anticompetitive practices actively hinder economic development by undercutting competition and stifling incentives to innovate.[1] Competition law is one tool of many which when taken together can create an environment that can foster “economic growth and innovation that leads to greater variety, increased quality, and/or lower price—and makes it more likely that those benefits are widely shared”.[2] The problem faced by many small developing states is not as easily solved as transplanting competition law from another jurisdiction.[3] Lack of access to adequate resources to support the requisite regulatory authority has stood as a barrier to effective application and enforcement of competition law in developing states. This resource constraint can be overcome by turning to supranational organizations, like the Economic Community of West African States (“ECOWAS”).  By coming together and adopting a joint competition law framework, member states don’t need to shoulder the cost of this endeavor alone. The supranational organization can pool costs and provide financial resources and legal expertise among both practitioners and judges that are all required to support minimum levels of enforcement which developing countries would otherwise struggle to provide alone.[4] The launch of the ECOWAS Regional Competition Authority (“ERCA”) last year is the latest in the recent trend of regional competition authorities filling the void in competition coverage in developing states. The proliferation of regional authorities like the Common Market for Eastern and Southern Africa (“COMESA”), whose jurisdiction covers twenty-one countries,[5] begs the question: what are the costs of this method of competition law enforcement and how do these costs factor into the development of member states? These costs can be considered in two buckets. First, there is a compliance cost to investors attempting to navigate the regulatory patchwork created by these overlapping competition law regimes. The creation of parallel competition law at the national and supranational levels raises the cost of compliance for companies operating in each jurisdiction and can undermine economic investment and development. [6] While this is true of any new regulatory regime that is implemented where there was previously none, the manner in which supranational organizations have implemented policies has overlapped with domestic institutions thus exacerbating such issues.[7] For example, there were initial concerns that Kenyan competition enforcement has inefficiently overlapped with COMESCA’s competition commission in recent years specifically regarding merger notification, creating significant barriers to investment.[8] International backlash resulted in slashing COMESCA’s filing fees for merger notification by sixty percent, among other reasons because of its unreasonable overlap with Competition Authority of Kenya.[9] There are structural ways to address the issue of coordination and inefficiency. When ECOWAS launched the ECRA last year, it made the choice to select a two-tiered model of enforcement to minimize inefficient overlap between the supranational enforcement of the ECRA, and national enforcement by domestic agencies like the Nigerian Federal Competition and Consumer Protection Commission.[10] The two tiered model functions by giving the ECRA exclusive original jurisdiction and investigation authority for regional cases, but leaving jurisdiction and investigative authority to the national competition authority in national cases.[11] In theory, this allows for member states with undeveloped national competition commissions to rely on the ECRA, while preventing parties operating in Nigeria from needing to comply with overlapping regimes. While the legal structure and mission of the national and supranational competition authorities are in sync, even something as minimal as divergent enforcement priorities can create inefficiencies that come at the expense of development goals.[12] To ensure complete coverage but minimize overlap in competition policies, constant coordination between the national and supranational level competition authorities should be encouraged. A second cost created by delegating competition law to supranational organizations is the creation of deleterious effects on the growth of domestic institutions of developing states. Such deleterious effects are caused in part by a drain of resources and expertise from within member states to those external institutions.[13] This reliance on external enforcement can prevent the forming of institutions within developing states, in turn hindering domestic development. There is no question supranational competition authorities have value. They enable small states to benefit from competition law to combat the pernicious effects of cartel and monopoly which would stand unopposed in their absence. [14] A balance between these factors must be kept in mind. So it is still a prudent goal for domestic policy makers and international organizations to continue investing in domestic capabilities despite the presence of supranational competition authorities. Overreliance on these supranational institutions can undercut domestic development. Despite these costs, the proliferation of competition laws at the supranational level is preferable to the effect of cartel and monopoly in developing states.[15] Stakeholders need to consider the costs of overreliance on supranational competition authorities in order to overcome institutional entropy which can hinder, rather than promote development.  Striking the right balance between these poles requires periodic correction but will be crucial in complementing larger development goals.

[1] See Marc Ivaldi et al., Measuring the economic effect of Cartels in Developing Countries (2014). [2] Umut Aydin & Tim Büthe, Competition Law & Policy in Developing Countries: explaining variations in outcomes; exploring possibilities and limits, 79 Law & Contemp. Probs. 1, 3 (2016). [3] See generally George Mousourakis, Legal Transplants and Legal Development: A jurisprudential and Comparative Law Approach, 54 Acta Jur. Hng. 219 (2013). [4]OECD Secretariat, Regional Competition Agreements: Benefits and Challenges, 15, OECD Doc. DAF/COMP/GF(2018)5 (Nov. 12, 2018). [5] Id. at 6. [6] Aydin, supra note 2. [7] Ashley Howlett et al., Antitrust Alert: COMESA Amends Antitrust Rules Requiring Merger Filings in Eastern and Southern Africa, Jones Day (2015), https://www.jonesday.com/en/insights/2015/05/antitrust-alert-comesa-amends-antitrust-rules-requiring-merger-filings-in-eastern-and-southern-africa. [8] Gomolemo Kekesi, A Practitioner’s Critique: the One-Stop Shop Regime of the COMESA Competition Commission, 9 (2018). [9] COMESA Competition Board of Commissioners, Rules on the Determination of Merger Notification Thresholds (April 5, 2015). [10] OECD, supra note 5, at 8. [11] Id. [12] See Competition Policy and Regional Integration in Developing Countries 129 (Josef Drexl et al. 2012). [13] Frédéric Docquier, The Brain Drain from Developing Countries, IZA World of Lab. (2014), https://wol.iza.org/articles/brain-drain-from-developing-countries/long. [14] Michal S. Gal, Regional Competition Law Agreements: An Important Step for Antitrust Enforcement 60 U. Toronto L. J 239, 242 (2010). [15] Ivaldi, supra note 1. The views expressed in this post represent the views of the post’s author only.