The Nigerian Federal Competition and Consumer Protection Commission is only 18 months' old, but has already been praised for its proactive enforcement of consumer protection and competition laws, particularly during the COVID-19 crisis.
The Commission was established by the Federal Competition and Consumer Protection Act in January 2019, and is responsible for both competition law enforcement and consumer protection. Amongst other things, the Commission is required to 'eliminate anti-competitive agreements' and to redress 'obnoxious trade practices' as well as 'unscrupulous exploitation of consumers.' The Act also prohibits any conspiracy, combination, agreement or arrangement to unduly limit or manipulate supply, in order to unreasonably enhance prices or otherwise restrain competition. Contraventions of the Act can attract financial penalties of up to N10 million (c. ZAR 500 000) for individuals and up to 10% of annual turnover for firms. Criminal sanctions on individuals may also be imposed. The Act applies to firms trading in Nigeria, and offshore entities trading into Nigeria.
During the pandemic period, the Commission has focused on addressing price-gouging on critical hygiene products, medications and medical devices. Following the first reported case of COVID-19 in Nigeria on 27 February, the Commission reminded market participants – particularly those firms trading in essential and personal hygiene items – to conduct themselves in compliance with the Act. On 1 March, the Commission issued letters to suppliers and retailers warning against price-gouging on essential items like face masks, gloves, sanitisers and anti-bacterial wipes. Shortly thereafter, Jumia, one of the largest Nigerian online shopping platforms, delisted 390 products supplied by 168 suppliers because the price of these essential items appeared to be excessive. The Commission also recently instituted proceedings in Nigeria's Federal High Court against four stores: H-Medix, Faxx Stores, Ebeano Supermarket & Bakan Gizo Pharmacy, over alleged price gouging. The matter is currently pending before the Nigerian Federal High Court.
The Commission has also launched an investigation into price manipulation in Nigeria's flour industry. This followed complaints received from the Association of Master Bakers and Caterers of Nigeria that the price of flour had increased from N9 000 (c. ZAR 400) to N13 000 (c. ZAR 600) during the COVID-19 crisis. The association responded to this increase in input costs by announcing that bakers would increase the price of bread by 60%. The Commission is investigating whether this announcement amounts to coordinated price fixing between competing bakers.
These developments in Nigeria highlight that it is critical for South African companies doing business in, and into, Nigeria to ensure that they have in place a comprehensive competition law compliance programme, which is appropriately tailored to deal with the fact that the Nigerian legislation prohibits a wider range of pricing and other practices which are harmful to consumers than the legislation in South Africa. Companies need a clear and concise pricing policy which is in line with the Act and which will enable them to identify possible contraventions before they happen. Firms and managers are otherwise at risk of significant liability.
Irvine is a Partner and Myburgh an Associate with Bowmans.