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The Birth of Competition law in Nigeria:
Challenges in Enactment, Institutional building
and Enforcement
prince i. Mbanefo
ll.m. international economic law and policy
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Summary
The quest for a competition regime in Nigeria first began in the year 2000 with the first
draft bill titled “the federal competition bill” presented for review in 2002. However due to lack
of a proper understanding of the law by members of the Nigerian government and various other
reasons, such as the political will, monetary cost and lack of capacity there is presently no
competition law in Nigeria. Before a country begins the journey towards establishing a
competition regime there are prerequisites for policy effectiveness. These prerequisites include;
competition advocacy and culture, resource (human and financial) development and
administrative independence from the government, among other factors, all of which are either
lacking or limited in Nigeria. For this reason, competition law has continued to be referred to as
the “egg that never hatches”. With the absence of these prerequisites, Nigeria will come across
numerous challenges pre and post enactment of a competition law.
Irrespective of these foreseen challenges, there is a need for a competition regime in
Nigeria. This will bring about economic efficiency and consumer welfare. It will also help to
secure the promise of equality, a decrease in poverty and a reduction in corruption. First, to
begin paving the way for a competition regime, the prerequisites identified to be lacking or
limited have to be addressed. Second, if a competition law is enacted, the institution created to
administer and enforce the law has to be designed in a way that economic, social and political
limitations present in Nigeria are taken into proper consideration. Even after the institution is
put in place, measures have to be taken to maintain the competition agency to ensure effective
enforcement. Third, during the drafting as well as implementation of the law, care must be taken
to avoid the temptation to overtly copy the laws of more experienced and developed countries.
This means that competition law in Nigeria has to be tailor- made to accommodate country-
specific peculiarities.
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Table of Contents
Part One: Introduction ………………………………………………………………………….6
2: Research Questions …………………………………………………………………….7
3: Overview of Competition law: Some relevant Facts …………………………………..8
Part Two: Competition law in Nigeria: The Journey so far ………………………………...10
1: A Brief History and failed Bills ………………………………………………………10
2: Benefits of competition Law in Nigeria ……………………………………………...11
3: The Nigerian economy and why a competition Law is needed ………………………12
Part Three: Reasons Why Nigeria lacks a Competition Law ……………………………….18
1: Political Will/Desire ………………………………………………………………….18
2: Competing Priorities ………………………………………………………………….19
3: Competition Advocacy, Culture and Acceptance …………………………………….20
4: Pre-Capacity Building …………………………………………………………….......23
5: Monetary Cost ………………………………………………………………………...24
Part Four: Challenges towards Effective Enforcement……………………………….……..24
1: Foreseen Challenges ………………………………………………………………….25
2: Resource Constraints/Scarcity ………………………………………………………..26
2.1: Human Resource Constraints ……………………………………………….26
2.2: Financial Resources ………………………………………………………...27
2.3: Prioritization ………………………………………………………………..27
3: Institutional Autonomy/ Independence ……………………………………………….28
4: Jurisdictional Overlap/Conflict ……………………………………………………….29
5: Weak Judicial System ………………………………………………………………...30
6: The Presence of informal sector ……………………………………………………...31
Part Five: Suggested or Partial Solutions to Foreseen Challenges ………….………………32
1: Drafting the Law and Institutional Design …………………………………………..32
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2: Resource scarcity and Capacity Building …………………………………………….32
3: Education ……………………………………………………………………………..33
4: Independence/Autonomy ……………………………………………………………..35
5: Dealing with Jurisdictional Overlaps …………………………………………………36
6: Proposed Institutional Design for Nigeria ……………………………………………37
7: Other Nuts and Bolts post Institutional Design ………………………………………40
7.1: Periodic Reassessment and Stocktaking ……………………………………40
7.2: Setting Priorities ……………………………………………………………41
7.3: Weighing Commitment to Capabilities …………………………………….41
7.4: Creating a Knowledge/Memory Bank ……………………………………...41
7.5: Attracting, Recruiting and Retaining Staff …………………………………42
7.6: Enforcement Cooperation with other Agencies …………………………….42
Part Six: Conclusion …………………………………………………………………………...43
Bibliography ……………………………………………………………………………………46
Table of Boxes
Box 1: Abuse of Dominance in Cement Importation Industry …………................................... 16
Box2: Allegation of Bid rigging and Collusion in the petroleum refining industry …………….17
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Abbreviations and Acronyms
BPE ---------------------------------------------------------------------------- Bureau of Public Enterprise
CBN ------------------------------------------------------------------------------- Central Bank of Nigeria
CEON ----------------------------------------------- Consumer Empowerment Organization of Nigeria
CPC ------------------------------------------------------------- Consumer Protection Council of Nigeria
CUTS ------------------------------------------------------------------ Consumer Unity and Trust Society
FDI ------------------------------------------------------------------------------- Foreign Direct Investment
FEC ------------------------------------------------------------------------------ Federal Executive Council
FMoJ ---------------------------------------------------------------------------- Federal Ministry of Justice
IBA --------------------------------------------------------------------------- International Bar Association
ICN -------------------------------------------------------------------- International Competition Network
IMF --------------------------------------------------------------------------- International Monetary Fund
NBA ------------------------------------------------------------------------------ Nigerian Bar Association
NCC -------------------------------------------------------------- Nigerian Communication Commission
NGO --------------------------------------------------------------------- Non-governmental Organization
NIPC ------------------------------------------------ The Nigerian Investment Promotion Commission
OECD -------------------------------------- Organization of Economic cooperation and Development
SAP ------------------------------------------------------------------------ Structural Adjustment Program
SEC --------------------------------------------------------------- Securities and Exchange Commission
SON -------------------------------------------------------------------- Standards Organization of Nigeria
TCPC --------------------------------- Technical Committee on Privatization and Commercialization
UNCTAD ------------------------------------ United Nations Conference on Trade and Development
WTO -----------------------------------------------------------------------------World Trade Organization
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Part One: Introduction
Competition law also known as antitrust law is seen as a set of rules, disciplines and
judicial decision adopted and maintained by a government in relation to agreements between
firms that restrict competition from other firms, including concentration or abuse of market
power by private firms (Dimgba 2006, 4). It also helps to minimize unnecessary government
regulation and control of the market ( Sengupta and Dube 2006, 5). The objective of competition
law can be divided into two. (1) To make sure anticompetitive practices and agreements are
prohibited in order to (2) allow normal market dynamics to transpire. It is intended to rid the
market of abuses (cartels and barriers to rivalry), and prevent future abuse (by blocking mergers)
(Joekes and Evans 2008, 6). However, competition law will not be effective without competition
policies to supplement. It can be said that while competition is a process competition policies
serve as a curative when the process fails to work (Joekes and Evans 2008, 3).
Thus, competition policy is seen as all governmental measures that may have an impact
on competition in the market, thereby, affecting the behavior of firms. They include; inter alia a
liberalized trade policy, licensing policy, conditions on entry and exit of firms, industrial policy,
and relaxation of government control and greater reliance on market forces (Joekes and Evans
2008, 5). Competition law seeks to promote competition between firms. This goes along to
ensure efficient allocation of resources, technical progress and consumer welfare. The proper
implementation of competition law and policy gives birth to what can be referred to as an
effective competition regime.
The quest for a competition regime in Nigeria has been referred to as the “egg that never
hatches” (Dimgba 2004, 6). This is because several attempts have been made to pass the law but
none have been successful. It is a fact that in this age of globalization, having a competition
regime can be a useful tool in maximizing the benefits which globalization has to offer.
However, it is also evident that the road to enacting a competition law for a developing country
is not without pitfalls and peculiar constraints. While developing countries strive for a
competition regime, it is important to make sure such laws are realistic, avoiding copying heavily
from other (mostly developed) countries. This is because an effective competition regime has to
be grown from local roots and not ‘parachuted-in from outside’. This mandates that the law
accounts for the specific political and institutional patterns that already exist, thereby making the
law acceptable to those who apply it and to whom it is applied (Dabbah 2010). Nevertheless, the
journey does not end when a competition law is enacted, rather it is just beginning. As a result,
there are follow-up actions which must be taken to maintain an effective competition regime.
Nigeria like most developing countries is confronted with what can be referred to as other
pressing needs or competing priorities such as poverty, illiteracy, unemployment and internal
conflicts ( Dabbah 2010). These pressing needs have huge implications when seeking to build a
competition regime.
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In this light, the motivation and importance of this study stems from the following lines
of thought. First, before Nigeria can embark on implementing an effective competition regime
there is the need to make sure that the necessary prerequisites such as human and financial
resources are in place, cultivated or being cultivated at the same. Second, whenever the
competition law is enacted, the laws have to be in-tune with the Nigerian economy and market
conditions. It is high time Nigeria and its policymakers see the need to create well-crafted
policies that will last, and do away with the norm of creating policies that end up dying on
papers, or if implemented does not realize the objective for which it was created to fulfill.
Enacting a competition regime is a huge task which will tap into all facets of society. Hence if it
is done it needs to be done properly. Third, Nigeria as a developing country will face a lot of
challenges pre and post enactment of competition law. Therefore, this study will bring some of
these challenges to light so that policy makers and other stakeholders can begin brainstorming
ways to mitigate these challenges as the push for a competition law in the country continues.
Possible solutions to foreseeable challenges pre and post enactment of competition law will also
be specified where applicable.
Accordingly, the proceeding parts of this paper will present the questions which this
study seeks to answer, and an overview of competition law. Part two of this paper begins with a
brief history of competition law in Nigeria, the benefits of having a competition law with respect
to the present state of the Nigerian economy. Part three presents the reasons why a competition
law is lacking in Nigeria. Part four sheds light on some of the foreseen challenges that are likely
to hamper the introduction of competition law and its enforcement when enacted. Part five goes
on to suggest ways to mitigate these challenges and also suggests the best institutional design for
Nigeria. Part six concludes the study and gives policy suggestions on ways forward as the quest
for a competition law in Nigeria continues.
2: Research Questions
Nigeria is seen as one of the beacons of hope in Africa in terms of development.
However, it lacks a competition regime which scholars have indicated as part of the engine for
development for developing countries. What is more, countries such as Zambia, Senegal,
Zimbabwe, Cameroon, Malawi, Papua New Guinea and South Africa have been able to do so.
As a result, this study will seek to answer the following questions;
Irrespective of the expected benefits of a competition policy which most policy makers
and stakeholders in Nigeria are aware of, why has the Nigerian government not been
successful at enacting a competition bill into law?
If and when Nigeria passes a competition bill into law, what are the challenges that are
most likely to hamper effective enforcement of the law?
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3: Overview of Competition law: Some Relevant Facts
At its core, among all the components of competition policy, competition law is seen as
the most vital instrument to encourage competition in the market place (Emmert et al. 2005, 5).
This is because competition is seen by market economies as a key feature of maximizing
economic welfare. There are two main reasons for this: (1) competition has an effect on static
efficiency of market outcome. This means that the introduction of competition in the market
advances resource allocation, and makes certain that the production of goods and services are
done at a minimal cost, thereby fostering the maximization of welfare at a particular point in
time. (2) Competition also improves dynamic efficiency of outcomes in the market. This is seen
as competition helps to bolster the entrepreneurial spirit and creativity of market participants. It
also pushes producers towards innovation and improvement of their products, creating technical
progress over time (Emmert et al. 2005, 5-6). For a society to achieve this and for the market to
exude these characteristics, the rules that are commonly in competition law provisions normally
deal with (a) abuse of dominant position or monopolization (b) mergers and acquisitions (c)
cartels or horizontal restraints, and (d) vertical restraints. These are referred to as anticompetitive
practices with the exception of mergers and acquisition which require proper analysis. This is to
make sure that the merger or acquisition does not create a dominant position that is unhealthy for
the market thus affecting efficiency and consumer welfare1 .
The recent trend of globalization which created a surge in cross-border trade and
commerce heightened the importance of private capital, and increase in FDI by multinational
corporations (Joekes and Evans 2008). This in turn has pushed most transition and developing
nations to shift their political agenda from state intervention which was the status quo in most of
these countries towards a more market oriented economic system of governance (Joekes and
Evans 2008, 4). In so doing, there has been a surge in the enactment of national competition
laws. Kronthaler indicates that until 1979 only around 24 countries had a competition law, and
most of them were developed countries. In the 1980s another seven joined the group. However,
the largest amount of countries having enacted a competition law was mostly from the 1990’s
which witnessed around 58 countries taking the step, most of which were developing and
transition economies. Since the year 2000 13 countries have joined the chorus, and even though
it is hard to have an exact figure of how many competition regimes exist today, it is estimated
that around 102 countries have a competition law (2010, 71). Such numbers indicate the
importance of such a law to any country.
Some of the factors likely to determine a country’s decision to enact a competition law
may include; the level of economic development. Countries tend to enact a competition law as
1 For a full example and explanation of anticompetitive practices and its effects in the market please see the write-
up by CUTS at http://www.cuts-ccier.org/7up4/pdf/NTW-Anti-competitive_practices_examples-Ghana.pdf
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their income reaches a certain level. However this is no longer the norm, as more and more
developing countries have started to enact competition laws mostly with the vision that it will
help foster development. The size of the economy is also a relevant factor as small economies
tend to shy away due to the fact that they often require state aid from the government in order to
protect small and medium-sized companies. Such act can go against the core of competition law.
Another factor is systematic reforms such as privatization, deregulation and trade liberalization.
It is emphasized by scholars and in various literatures on competition law that these reforms will
not be as fruitful unless competition law is in place.
Competition law also helps to drive FDI into the economy as it helps to augment the
confidence of investors. However, as preferential treatment (which is not in compliance with
competition rules) is frequently used by most developing countries to attract FDI there is a mixed
feeling on the impact of competition law on FDI. International organizations such as the IMF and
UNCTAD also play a huge role in some countries as they enact their competition law. As a
matter of fact it has been reported that some countries have introduced competition law due to
pressure from the IMF (Kronthaler and Stephan 2005, 10). Last but not least corruption also play
a role, as countries in which there are high levels of corruption are less likely to have a
competition law (Kronthaler and Johannes 2005, 7-11).This is because competition law can be
used to expose “sweetheart” deals by the government (Joekes and Evans 2010, 10). Hence
government officials are often against it as it might expose their crafty deals.
At this juncture, it is necessary to point out that competition law is not the same as
consumer protection law as both laws are often confused. This is because competition law does
not directly deal with consumer protection such as “the protection of consumer’s ability to
choose freely and effectively among their options”( Dimgba 2006, 9-11), or trading standards.
Nonetheless, both concepts are related due to the fact that they deal with providing consumers
with access to numerous goods and options in the market, at a competitive price (Dimgba 2006,
9-11). Furthermore, passing a competition law does not guarantee effective enforcement. Hence
it is important to note that a country that lacks inter alia the necessary legal framework for
effective enforcement may lose the benefits of competition law to anticompetitive practices by
firms (Emmert et al. 2005, 6). This again reinforces the need to have the necessary prerequisites
in place to promote effective enforcement.
Part Two: Competition law in Nigeria: The Journey so far
1: A Brief History and failed Bills
Having a competitive market protected with a competition law is not a novel discussion
on the Nigerian roundtable. Such discussion first began in the year 2000 when the federal
government called upon the BPE to set-up a competition reform committee in order to begin the
process of developing competition policy and reforms in Nigeria (CEON 2008, 23). This
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consequently resulted to the first draft bill in 2002 titled “The Federal Competition bill”. The
purpose of this bill was to set up a federal competition commission which was to inter alia
“prohibit restrictive contracts and business practices that substantially lessen competition and
regulate the abuse of dominant position of market power and anticompetitive business combines”
(Sams 2010, 1). First signs to enact a competition law were followed in 2003 when a draft
competition bill was released to the public (Dimgba 2008, 16). But unfortunately further actions
were not taken after the presentation stage of the bill, and since then it disappeared.
A new bill was introduced in 2006 under the supervision of the FMoJ. However, after
receiving endorsement by the government, approval by the FEC, and an introduction as a bill to
the Senate of the National Assembly, it was rejected by Senators during its first reading (Dimgba
2008, 17). On evaluating the bill, some commentators indicated that it granted too much power
to future competition agency ministers, including provisions that could lead to overwhelming
political control which goes against the “global trend” that stresses the need for autonomy in
implementation of competition laws (Dimgba“n.d”, 16). This and the fact that some of the
Senators who had to make decisions on enactment had insufficient understanding of the nature
and essence of competition law contributed to the hostile reception and outright rejection of the
bill by the Senators. As a result, the process was brought back to square one.
From September 2006 to March 2007, a team made up of BPE consultants, Nigerian
lawyers and practitioners in the field took up the task to revise the 2006 bill and came up with a
new draft bill that addressed some of the faults of the previous bill (Dimgba 2008, 17). It was
thought that the government will accept and push the newly revised bill, but this was not the
outcome, as the bill once again, hit a brick wall called the Nigerian Senate. In 2008 another bill
sponsored by a Senator was presented which sought to establish the “Nigerian trade and
competition commission”. After passing its first and second reading in the Senate, the bill was
“referred to the joint committees on establishment and public service matters, the Judiciary,
human rights and legal matters, and commerce” (Sams 2010). Like its predecessors, this bill was
stalled at the joint committee stage. Due to these setbacks, there is presently no competition law
in Nigeria.
2: Benefits of Competition Law in Nigeria
Competition law and policy can play an important role in the progression of any
developing country. This is because it is a leading tool in bringing down firms that engage in
exploitative and abusive market behavior. Joekes and Evans indicate that the enforcement of
competition law brings about “economic democracy”. This term emphasizes (1) the
empowerment of consumers and the enhancement of their welfare through the efficient
allocation and utilization of resources. This increases output which improves consumer choice
and also lower consumer prices, thereby increasing economic power. (2) Benefits for firms. This
is because firms that were targeted by anticompetitive practices improve with the presence of
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competition law and those firms carrying out anticompetitive activities also gain as pressure by
new entrants drive them to do better. This can in turn expand their markets at home or abroad,
and as entry barriers come down entrepreneurship becomes more rewarding (2008, 23).
The reason why Nigeria has made so much effort to enact a competition law is because
market operators, stakeholders, some consumers and members of government are aware of these
benefits. According to CEON, the “lack of competition law is leaving Nigerian consumers
vulnerable to unhealthy competition” ( Sams 2010, 1). The CPC has also indicated that an
effective consumer protection regime can only be upheld to the utmost in Nigeria if it is backed
up by effective competition law. The Director General of the CPC further added that “the
absence of a competition law in the country has been detrimental to the process of evolving
functional markets, in addition to hurting consumers” (CPC 2008). The overall notion is that the
lack of a competition regime has cost the country the benefits which a lot of developed,
developing and transitional economies have obtained from the presence of competition law.
Additionally, the current Nigerian industrial policy aimed at bringing the private sector
to the forefront through the deregulation and privatization of the economy is based on market
ideology. The aim is to disengage the government from handling activities which should be
handled by the private sector, thereby giving the government the sole responsibility of being
facilitator— providing infrastructure and incentives to help stimulate the private sector as the
“engine of growth” (CEON 2008). However, in the midst of such a liberalization program, there
is the need for competition law. This is because having a competition law will help fend off or
limit any form of anticompetitive behavior by the state, or private firms which may affect
economic efficiency and consumer welfare (Dimgba 2008, 9-10). The issue of economic
liberalization and how it relates to having a competition regime will be dealt with in the next
section.
Competition law can also contribute to fostering economic equality in Nigeria, through
the balanced dissemination of rent. This point is derived from the fact that in Nigeria- like most
developing countries, there is a concentration of wealth among a few (mostly politicians) which
leads to income inequality. This means that if big businesses are connected with these politicians
there are bound to be monopolistic tendencies, and any push towards competition by smaller
firms will yield no result. However, with the presence of competition law, the playing field
becomes leveled for both big and small firms. Also, having a competition regime in Nigeria
means that businesses will become aware of issues relating to competition as they interact with
more developed economies that are more knowledgeable and operate their businesses based on
the laws of competition. The presence of a competition regime will also give investors more
confidence in investing in the Nigerian economy, which will ultimately aid development
(Dimgba 2008, 13-14). Evidence of this is seen in the low earnings from the non-oil sector
export compared with earnings from imports in the same sector. The low contribution of the
manufacturing sector in the Nigerian economy can also be attributed to the lack of competition
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(CEON 2008, 32). Thus the introduction of competition law will help to stimulate other sectors
of the economy.
Competition law in Nigeria will drive productivity gains and export performance as firms
previously engaged in anticompetitive practices come under fire due to the new law. This will
force firms to improve their performance in order to remain in the market as markets become less
accepting of anticompetitive practices by incumbent firms. This was the case in Tanzania as the
introduction of the Fair Trade Practice Act in 1994 had a tremendous impact on firm productivity
(Joekes and Evans 2008, 24). More so, as entry barriers come down and new firms enter the
market productivity is also realized. For example, following the withdrawal of government
involvement in the steel and cement sectors in both South Africa and Egypt, and allowing new
players to join the industry the incumbents responded by increasing their productivity, which
increased their profitability as well (Joekes and Evans 2008, 24). This demonstrates that the
introduction of competitive principles in the market can serve as a medium to awaken market
participants so they can realize the need to be productive and innovative in order to remain
relevant. However, apart from attaining the benefits indentified above, there are reform activities,
policy objectives and business practices within the economy which require the attention of a
competition law too.
3: The Nigerian Economy and why a Competition Law is needed
Generally, developing countries have a difficult time putting in place effective
competition regimes. This is coupled with the fact that it is often hard to determine the exact role
of a competition regime due to various forms of economic constraints present. In spite of this, the
reality still remains that developing countries around the world have been able to enact
functional competition regimes through the consolidation of market principles, a transition from
state ownership, intervention and vertically integrated monopolies to a stage where market
functions can occur, and economic agents interact in a freer environment (UNCTAD 2003, 2).
One of the main objectives of the Federal Ministry of Industry in Nigeria has been the
transformation of the economy from its agrarian form to a more industrialized one (CEON 2008,
13). As a result, the focus of Nigeria’s industrial policy has been to liberalize the economy
through the introduction of deregulation and privatization of key sectors of the economy in order
to inter alia, improve industry productivity and competitiveness, generate employment, increase
private sector participation, attract FDI and improve technological know-how and its availability
(CEON 2008, 13).
As indicated earlier, any reform program which includes the privatization and
deregulation of economic sectors has to go in hand with a national competition law. This idea
has been authenticated by various competition law scholars and practitioners (Emmert et al.
2005, 5). To further justify this claim, various OECD representatives during some of its Global
Fora on competition have indicated the following. According to the representative from Zambia,
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There is the need to assist the restructuring process of the economy by a law to regulate
privatized enterprises: it was evident that the removal of subsidies and price controls would put
consumers at the mercy of the monopolies that dominated the market. In order to achieve price
stability, the government needs measures to moderate inflation by checking the power of
monopolies to apply higher prices and reduce output by virtue of their dominant market
positions (Emmert et al. 2005, 14). This means that competition law is necessary in order to keep
the behavior of newly privatized firms in check.
A representative from South Africa also added; not only could enterprises behave in
anticompetitive ways after the privatization process, but even the process of privatization itself
could be anticompetitive: in truth the institutions and their managers are sufficiently powerful to
blunt competition, and there are too many other major non-competition objectives linked to
privatization. Fiscal considerations and the desire to maximize the price of assets impart an
anticompetitive bias to privatization and the understandable temptation to use privatization as
an instrument of social engineering (Emmert et al. 2005, 14). Hence competition law is needed
to act as an oversight on privatization and like reforms.
The privatization process carried out in Nigeria has neither improved competition in the
markets, nor has it brought down the price of goods and services as it is suppose to. Rather what
we see is the concentration of economic power in the hands of some big firms.
Deregulation is seen as a process whereby market-distorting intervention by the
government such as economic, environmental, social and health regulations are minimized. The
aim of deregulation is to ensure that regulations are transformed to better serve the public interest
and reinforce competition in the market (UNCTAD 2003, 7). This entails privatization and
liberalization of market restrictions such as entry and exit barriers. Deregulation in the form of
privatization began in Nigeria through the Privatization and Commercialization decree of 1988
as part of the IMF’s SAP (CEON 2008, 15). The TCPC was set up to privatize 111 public
enterprises and commercialize 34 others. However by 1993 only 88 of the 111 had been
privatized. Hence the Federal Military government called on the BPE to help in implementing
the privatization program. In 1999 BPE helped to create the National Council on Privatization
(CEON 2008, 15-16) which took over the task of privatization in the country. Up till date
Nigerian is still going through various forms of privatization through various programs adopted
by the federal government and under the supervision of the BPE. Such delay has brought a lot of
criticism on the government including from competition scholars in the country. Dimgba has
emphasized that competition law is a prime requirement for any liberalization and reform effort.
This is because it will control and “limit unnecessary intervention or abuses of power in the
marketplace by the state or by private sector enterprises that adversely affect economic
efficiency and consumer welfare” (Dimgba 2008, 9-10). Thus, it is necessary for the government
to back up these efforts with an effective competition regime. If not, new dangers will be created
in the economy. According to Dimgba;
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When we liberalize and deregulate vital sectors of our economy as
we have done, ushering in, in place of government monopolies,
private players who are not constrained by social interest and
whose overriding drive is profit, there is nothing to prevent the
new firms from engaging in abusive behaviors such cartelization,
price fixing, market division, excessive pricing and so on. Yet in
what would appear to be a bitter irony, in the absence of a
competition law, such practice would be legal, no matter how
detrimental it is to the economy and consumers. The moral to be
drawn is that half liberalization in some cases is worse than no
liberalization at all, since it ends up creating hitherto unknown
dangers. Therefore Nigeria’s market liberalization program which
lacks a legal regime such as a competition law to regulate
competition in the market is fundamentally flawed and ought to be
reconsidered, since competition law is a compliment to general
liberalization (Dimgba 2008, 10).
To justify this statement, there was a recent situation which involved the privatization of
refineries in Nigeria. The BPE transferred 2 major refineries (Port Harcourt and Kaduna) with
nearly 60 percent share of the petroleum refining market to one undertaking, even when there
were other interested bidders, claiming that it was the highest bidder (Dimgba 2008, 11).
Regardless of the fact that one undertaking might have been the highest bidder, what are being
dealt with here are two major refineries in the Nigerian market. Any economics student will
point out that such move makes no economic sense. This is because by doing so competition in
the petroleum refining market is diminished. It is obvious that if there was a competition law in
operation in the country such act will not occur, at least without proper assessment of its impact
on competition in the relevant market.
As hinted on earlier, competition law in Nigeria will also introduce domestic firms to
international competition laws and principles which will help them to gain international exposure
to compete in foreign markets. The idea is that as the introduction of competition law harnesses
competitive industries, firms will be forced to use their resources efficiently thereby encouraging
innovation in technologies. As firms get used to conducting business in a competitive
environment domestically, it will also help them to compete better in international markets with
foreign competitors (Emmert et al. 2005, 19). A major example of this can be illustrated using
the Nigerian LNG case, where the European Commission had to step in because some of LNG
Nigeria’s terms in its contract with its European customers violated EU competition law
(Dimgba 2008, 13). Such encounters can harm the credibility of the Nigerian market.
Furthermore, it has been pointed out by most developed countries in the WTO that
competition law and policy could be used to facilitate development by making developing
countries more attractive to FDI. This is because it will help to provide transparency in the area
of disputes involving multinationals. It will also help in cultivating a market-oriented framework
which will help to eradicate market and contract uncertainties, including transaction costs
(Emmert et al. 2005, 18). According to Egypt’s representative to the WTO, “competition policy
could be seen as a prerequisite for the entry into the developing host countries by some
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multinationals” (Emmert et al. 2005, 18). For this reason if Nigeria wants to attract foreign
investors to aid development there is the need for a competition regime. This will help investors
to be more confident in committing capital freely, knowing that they are dealing with a true
market economy with a thriving competition policy and law to control the behavior of
competitors in the marketplace (Dimgba 2008, 14). However, there are conflicting views on the
impact of competition as it relates to FDI especially in developing countries as some
commentators note that it could have a negative effect on the flow of FDI. This stems from the
fact that developing countries often attract FDI using preferential treatment mechanisms which
would go against the essence of competition rules (Kronthaler and Stephan 2005, 9). Still, the
positive effect outweighs the negatives especially when it comes to a country like Nigeria that is
reaching higher heights in terms development. Furthermore, international organizations such as
the IMF and UNCTAD being serious advocates of competition law in developing countries are
ever willing to help in providing technical assistance. Such aid can contribute to developmental
goals if such opportunities are properly managed by the receiving country.
Competition law also helps to curtail corrupt practices by the government. One thing that
is not novel when it comes to Nigeria is the word corruption as both are often associated, even
though no country is any better (just better in hiding it). Due to the fact that corruption can affect
the competitive environment of an economy through politician—private sector relationship, the
presence of a competition regime can help to keep an eye on such behaviors which result from
these relationships. Various countries admit that they enact competition laws in the hope that it
will help to stop unhealthy favoritism. For example, “in Indonesia, the competition law was
enacted, inter alia, to address public concerns regarding monopolistic practices and closely
related concerns about corruption, collusion and nepotism”. More so, “in China, emphasis was
laid on standardizing administrative monopoly to eliminate corruption and to create an
environment of fair competition” (Emmert et al. 2005, 20). It is not farfetched to conclude that
one is likely to find such behaviors between politicians and the private sector in Nigeria as well.
Hence, the introduction of competition law in Nigeria will help undermine such corrupt
practices.
Most importantly, competition law is needed in Nigeria to prohibit anticompetitive
business practices and agreements2 by local firms and local subsidiaries of multinational
companies in developed economies who may behave competitively in Europe and the US due to
effective competition law enforcement, but behave otherwise in developing countries due to
weak or no competition law (Dimgba 2006, 14). It has been noted that the imperfections in the
Nigerian market is relatively high compared to other countries, even though there is no perfect
market in the world. This is mainly due to monopolistic producers and distributors of goods and
services (major example being in the cement industry), excluding the natural monopolies in
sectors such as electricity, water supply (CEON 2008, 19-20) etc. This often leads to
anticompetitive practices such as;
a.) Abuse of Dominance or Exclusionary Behavior: A process whereby dominant firms
use their market power to manipulate prices above competitive levels. The consequence
2 A situation where two or more firms agree to fix prices, limit production, divide markets
geographically or rig bids when pursuing government contracts.
16
of this falls on consumers who are exploited as a result of high cost of goods and services
as opposed to the quality of the products being sold and services offered. More so, these
firms may also engage in predatory pricing, price discrimination and unfair rebates to
drive other competitors out of the market (CEON 2008, 29). These practices have been
found to be carried out by fertilizer firms in Nigeria. Although the distribution of
fertilizer in Nigeria is mostly carried out by government agencies, representing 76
percent of the market, the remaining 24 percent of the market is held by private firms and
multinationals that is found to be involved in the above anticompetitive practices,
including resale price maintenance (CEON 2008, 41).
Tacit collusion and cartels: a process where two firms decide to conduct business in a
specific strategy that can hurt other firms in that market without being open about it. This has
been identified as one of the major anticompetitive practices in Nigeria, mostly prevalent in
the commodities, manufacturing, GSM telecommunications and petroleum products
b.) Tacit Collusion and Cartels: a process where two firms decide to conduct business in a
specific strategy that can hurt other firms in that market without being open about it. This
has been identified as one of the major anticompetitive practices in Nigeria, mostly
prevalent in the commodities, manufacturing, GSM telecommunications and petroleum
products marketing sectors (CEON 2008, 30). More so, in Nigeria the cement industry is
mainly composed of 13 national producers who are also involved in the importation of
cement. Among these producers, WAPCO which is a subsidiary of LAFARGE (a French
Producer) controls 55 percent of the market. Together these 13 producers represent 80
percent of the Nigerian cement market and are members of the Cement manufacturer’s
Association (CUTS 2010, 39). Due to the fact that the price of cement in Nigeria is
always on the rise, and does not compare with the price of similar package size in other
countries, consumers have complained that this association is actually a cement cartel
allowing the market to be cornered by its members (CUTS 2010, 39). Box 2 gives an
illustration of collusion in Nigeria.
Box 1: Abuse of dominance in cement importation industry
Dangote, Nigeria’s largest importer of bulk cement, has four bagging plants in the country: the
Lagos Cement Terminal at Apapa Port, the Aliko Inland Terminal at Lagos, one in Onne/Port
Harcourt and one in NPA Area 1 Port Harcourt with a combined production of 3 million MT per
annum. With its overriding influence on the Obasanjo regime, Dangote Cement always managed to
seize cement import quotas of between 6.5 and 9 million MT per annum. Keeping hold of so much
import quota enabled Dangote to limit what was available to other operators. Dangote regulated
how much of their cement import quota to use and when to use it and so has successfully been
manipulating market prices. Dangote Cement did not only tyrannize other producers but
also succeeded in frightening away would-be new entrants into the cement industry with bogus
claims. These claims included wild production and expansion figures that were never met but were
accepted by the Obasanjo government as a basis for the issuance of import quotas.
Extracted from: (CEON 2008, 29)
17
c.) Mergers and Acquisition (M&A): This is simply the coming together of two firms to
form one. This is more prevalent in the manufacturing and financial sectors. However,
much ado is not made about M&A’s in Nigeria because the effect to the market is not
assessed due to lack of a competition culture. As a result anticompetitive mergers occur
without being checked (CUTS 2010, 30). Merger control regulation is essential because it
ensures that a merger does not cause too much market concentration which can lead to
abusive behavior. Laws dealing with merger control are often referred to as ex-ante. This
is because the competition authority can block a merger before it happens (after proper
analysis of the effect in the market), while other anticompetitive agreements or an abuse
of dominance is ex-post— i.e. it’s reactive, the event has already occurred.
The fact that Dangote seems to be present in both anticompetitive practices (box 1 and 2) shows
the dominance of Dangote products in the Nigerian market and the abuse of such dominance due
Box 2: Allegations of bid rigging and collusion in the Petroleum Refining
Industry
The Bureau of Public Enterprises, the agency charged with the sale of government-owned
businesses, revealed that for the sale of the oil refinery in Kaduna and Port Harcourt, Blue
Star won the competitive bidding. However, Blue Star itself was a consortium made up of two
companies (Dangote and Otedola) and River State government, revealing that the
transaction itself had signs of collusion and price-fixing. Foremost, the two business
companies were strong competitors in their own right who teamed up to make a bid, thus
eliminating any stronger competition. In addition to this, acting in concert with the Rivers
State government effectively neutralizes local opposition and assures government support.
However there could be nothing illegal about any of these moves in the absence of
competition legislation, but in its presence the consortium should have been disallowed from
bidding solely on the ground of collusion and unfair advantage. Furthermore, the BPE use of
the term "competitive bidding" is highly questionable. For one, Blue Star Consortium never
participated in the bidding process leading to the sale of the Kaduna Refinery. The shady
process that led to its emergence is fraught with loopholes that any innovative businessman
will exploit for unfair advantage. For example the China National Petroleum Corporation
(CNPC), which was offered the right of first refusal in the Kaduna Refinery, had offered $102
million for the firm. This, according to BPE, could not match the reserve price. This paved the
way for Dangote to offer $160 million to buy the plant. The process was, however, not thrown
open to a competitive process. It is very possible that Dangote had asked the Chinese to low
ball so it can still get KRPC on the cheap, implying that a case of price-fixing can be made
against Blue Star.
Source: (CEON 2008,39)
18
to lack of a competition law. To be clear, dominance is not forbidden in a competitive market,
rather it is the abuse of dominance that is wrong and is being referred to. As a developing
country, there are major anticompetitive practices which can be very detrimental to the
development of the country. The above mentioned are the three main anticompetitive practices
which competition law seeks to address. This is why they have been highlighted. Having
identified why Nigeria is in need of a competition law and regime, a major question becomes
why have Nigeria not been able to do so. This is the first major questions this study will attempt
to answer.
Part Three: Reasons Why Nigeria lacks a Competition law
1: Political Will/Desire.
In any country, politicians are seen as the force through which laws and policies are
implemented. Therefore if Nigerian politicians had the desire to put in place a competition law,
by now it should have been done. However, such outright rejection does not come in vain.
Dimbga indicates that due to the settlement culture in Nigeria, coupled with politician-big firm
relationships which are prevalent in the country; there is the tendency for both parties (big
business owners and politicians) to agree not to interfere in the arena of the other (2008, 18).
Also, these firms have the money to lobby these politicians. As a result, even though they create
unhealthy market conditions, politicians will not have the will to do anything about it because
during the next election, campaign money is going to be needed to aid re-election. This means
both parties gain from staying clear of each other’s path. To further shed light on this view, the
last time the government constituted a committee to look into the need of creating a competition
regime in Nigeria, the committee was dominated by major big business owners such as Mr.
Bunmi Oni, the past managing director of Cadbury and Alhaji Aliko Dangote (Dimgba 2008,
18), who owns the biggest cement industry (Dangote) and other factories and food processing
chains in the country. It is obvious that such individuals will not want to rattle the orientation of
the market that has brought riches to them or help in creating a system that will likely cause the
money to stop coming in, in large amounts. This is not to say that such individuals should not be
part of the committee. Rather, there has to be a mix of individuals from the business sector and
practitioners such as small business owners, customers, lawyers and economist. Such mix will
bring about well rounded views and opinions.
Another evidence of the lack of a collective political will to have a legal competition
regime was seen during the 2008 CEON meeting held in Abuja the capital territory of Nigeria.
The Coordinator General of CEON pointed out that the 2008 bill that managed to get two
readings at the Senate was due to the fact that the sponsor of the bill at the time was the Senate
committee chairman on commerce (Sams 2010, 1) without which the bill would have suffered an
early death. One can only conclude that such apathy towards the idea of competition is due to
the fact that Nigerian politicians have already decided that a competition regime will never be
enacted in the country, or an outright lack of understanding or neglect of the economic benefits
of such a law (Sengupta and Dube 2008, 10 &13). If the former is the case, then politicians need
to begin to educate themselves, and become aware of the economic benefits of fostering a
competitive environment. Competition law in Nigeria can only be realized if the government
begins to show willingness like politicians of other developing countries who have realized the
19
economic benefits, and as a result have begun to lay down the ground work for an effective
competitive environment to flourish. Political leaders in Nigeria have to look at competition
policy as part of the national development goal.
Political cost can also be blamed for lack of competition law in Nigeria. This is a
process whereby the government due to poor public support is unable to introduce new policies
or laws which are envisaged to have positive effects in the long run, but may initially hurt the
economy. This is the case with competition law, as the benefits tend to kick in with time.
Governments in most developing countries are often keen to enacting policies that promise
immediate results (Emmert et al. 2005, 44). This tends to be the case in Nigeria as politicians see
it more beneficial to their career as well as their constituency to commit more time and
willingness to see polices that their benefits will be realized early. On the one hand, political
economy theory indicates that politician often pursue policies that are beneficial to them
(mandates). Which is why politicians are devoted to pursuing short term fixes instead of policies
that will maximize welfare overtime (Emmert et al. 2005, 44). On the other hand, from an
economic perspective it makes more sense to pursue policies that maximize welfare overtime
such as competition policy and law. The pursuit of immediate results is also linked to the fact
that there are competing priorities which politicians as well as the public may regard as more
important than a competition law.
2: Competing Priorities
These competing priorities may include; societal goals such as good infrastructure,
poverty alleviation, access to good education, strategic trade policies, health facilities etc. As a
result, it seems that pursuing competition policy and the large expenses that it requires are a
waste of finances which can be used to solve other more pressing and immediate needs the
country faces. One of the immediate needs pertinent to Nigeria is having an efficient trade
policy. This is because it has been argued that competition policy does not allow developing
countries the necessary policy space or discretion to strategically implement trade policies in
ways that will be beneficial to the economy. Nevertheless, strategic trade policy may require
temporary protection with the view that development has to take an inside-out approach. That is,
technologies and know-how acquired from outside have to be developed internally in other to get
domestic industries to the level of its outside counterparts (increasing the share of value added at
home/import substitution) (UNCTAD 2003, 8). To do this there is the need to protect domestic
firms from outside competition.
This is exactly the module of Nigeria’s trade policy— a protectionist approach, which is
designed to allow certain level of protection of domestic enterprises, evidenced in Nigeria’s tariff
concessions as a member of the WTO. Such approach has been criticized by the CEON, which
argues that such protectionist approach that restricts various products from entering the country
goes contrary to the main objective of the national trade policy which deals with improving the
competitiveness of domestic firms. However, it is good to have in mind that a protectionist
approach is not entirely wrong as many developed countries we see today took the same
protectionist policies to get where they are. Nonetheless, such policies have to be carried out in a
strategic manner as government have to figure out which industries hold the best promises in
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order to cultivate “national champions”, something that the Nigerian government is yet to figure
out.
It is good for stakeholders in Nigeria to realize that the core benefits of competition
policy, which includes innovation and its effect on economic growth goes beyond trade
liberalization (UNCTAD 2005, 9). As long as protectionist measures are selective and do not
involve all enterprises alike, it is likely to distort the markets and competition hence not
compatible with a competition law (Kronthler and Stephan 2005, 12). In this respect, the
Argentine representative to the WTO on competition policy stresses that “there is a danger of
attributing to competition policy social cost that are really the result of more systematic changes
relating to a movement away from pervasive regulation and state ownership” (Kronthler and
Stephan 2005, 12). Nothing can be accepted as a compromise for the absence of competition
policy and law in an economy. Thus, the right approach to be taken is not “competition policy: to
have or not to have” (UNCTAD 2005, 9). Nigeria should focus on how to introduce and
implement and effective competition regime in the country, and to maximize the expected
benefits thereof, regardless of existing economic constraints. To do this, the public sectors as
well as consumers have to play major roles.
3: Competition Advocacy, Culture and Acceptance
According to Sengupta and Dube, “for various reasons market-oriented regulatory
reforms are often viewed with apprehension by most constituencies in the developing world.
Even by those who are expected to be the major beneficiaries of open markets and competition,
particularly both consumers and those in the business sectors” (2008, 13). Thus, there is the need
to take preliminary steps in order to get all market participants well informed about competition
policy and law. These preliminary steps have not been taken in Nigeria. This is seen as the
average Nigerian knows nothing about what it means to have a competitive economy governed
by a competition law. Such a situation is not good; at least members of society should be aware
of minor competition issues in the market no matter how small. This can be resolved through
advocacy which is vital to cultivating a competition culture. This will in turn help trigger the
acceptance of creating a competition regime by consumers in the society. The ICN has defined
competition advocacy as “those activities related to the promotion of economic activities, by
means of non-enforcement mechanisms, mainly through relationships with other government
entities and by increasing public awareness of the benefits of competition” (OECD 2004, 5).
Competition advocacy is not only necessary when competition law has been enacted. It is also
necessary before the enactment of competition law (what can be referred to as pre-
advocacy).This is because it helps to create awareness and educate the public on the relevance
and benefits of having a competitive market. Thus competition advocacy is one of the pressure
tool used to begin paving the road for a vibrant competitive economy. This can be carried out by
various stakeholders and consumer organizations. Since Nigeria does not have a competition
authority, regulatory institutions such as the CPC, Special Trade Malpractices Investigation
Panel, and SON to name a few which are presently held with the responsibility of handling
competition issues (Adedeji 2006, 270) should be active in advocacy programs as well. As
pointed out by CUTS , “competition advocacy is needed before competition legislation to ensure
that rules made during market reforms are consistent with the competitive spirit and to counter
activities of interest groups trying to capture ground lost through recent economic liberalization”
21
(CUTS 2007, 4). This validates the necessity for Nigeria to begin to create avenues through
which advocacy can be created on competition issues if the law is to thrive when enacted.
Competition advocacy can be carried out through various activities which include inter
alia; conducting seminars involving business owners at different levels, printing flyers and
handouts detailing the basics of competition law etc and making them available to the public. All
this can be done with help from academicians, lawyers, consumer protection organizations,
economists and established practitioners. More so, getting the media involved will go a long way
to create awareness. In addition, appearing and making arguments in favor of competition law in
front of legislative committees at public proceedings, and also providing handouts and press
releases identifying anticompetitive cases in different countries will also aid the cause.
Especially when it deals with similar anticompetitive activities found in Nigerian markets
including how they were resolved, and the harm caused as a result of such practices. Also, being
able to indicate the possibility of further harm to the economy if such practices are not stopped
through competition legislation will help drive the idea home.
Competition advocacy will also help to create a vibrant competition culture which is
presently lacking, but essential in creating a competitive economy. Competition culture generally
deals with the attitude of consumers and producers towards anticompetitive practices in the
market place. On the one hand, assessment of competition culture entails indentifying how easy
it is for consumers to identify monopolistic activities, predatory pricing and abuse of dominant
position, or do consumers just surrender to these activities. On the side of producers, if they are
content with encouraging anticompetitive practices, enjoying the privileges and trying their best
to maintain the status quo, then such characteristics are evidence of a weak competition culture
(ICN 2002, 31). On the other hand, if consumers are able to indentify some of these
anticompetitive practices which in turn prompts the search for better options in the market (a
bang for their bucks), and producers are doing their best to provide consumers with more and
cheaper options, then a competition culture is said to exist (ICN 2002, 31). However, due to
insufficient competition advocacy such culture is absent. As a result we see the former taking
place in Nigerian markets, i.e. majority of consumers surrendering to anticompetitive practices
with the feeling that everything is expensive in this country, this is just the way it is and nothing
can be done about it. At the same time, producers take advantage of this situation, reaping profits
to the detriment of consumer welfare and economic efficiency for which much blame cannot be
ascribed to them due to ignorance.
An incident that occurred in Algeria is a good way to illustrate the need to have a
competition culture in existence in the society before a competition law is put in place. During
the 1995-2002 assessment of Algeria’s competition law, it was revealed that “there is a long way
to go until a genuine culture of competition emerges, not only among firms, but as a way of life
that includes consumer behavior too”. To correct this shortcoming, the existing competition law
in Algeria was revamped, and a new act was passed which specifically addressed the need to
build a competition culture first (Emmert et al. 2005, 19). This kind of mistake has to be avoided
in Nigeria, considering the fact that the issue of enacting a competition law has already taken so
long with so many failures. Nigeria does not have the luxury to enact a law which will pose
problems later on due to lack of necessary prerequisites such as a competition culture— at least
this paper will serves as a warning. To avoid such mistake and consequently further delay, all
22
hands must be on deck to help and develop a competitive culture. This is necessary so when the
law is finally enacted the country will not only be properly equipped to enforce the law, but
every layperson at least will be able to understand the basics of a competitive economy.
The lack of competition advocacy and culture in Nigeria has resulted in a colossal
unwillingness to accept competitive ideas among local firms, authorities and the general public.
As has been indicated in other sections of this paper, the introduction of competition policy and
law requires a lot from a country, from its effect on fiscal policy, to the reality of foregoing what
might be seen as other pressing needs. All this can weigh a lot on a country enacting competition
law for the first time, and even more when it is a developing. Thus, one cannot blame those
members of society who may not be willing to immediately jump on the competition band
wagon. According to Dimbga the problem of acceptance is constantly faced in “championing the
competition law cause in Nigeria”, and for the political class it is due to ignorance and lack of
commitment (2008, 22). For example, the Senate indicated that part of the reason they rejected
the competition bill that was presented in 2006, was due to the fact that a similar law has been
passed before. Such statement shows lack of knowledge in the area by the Senate as they must
have confused the Consumer Protection Act for a competition law. This is because in reality, no
such law similar to a competition law exists (Dimgba 2008, 22) in Nigeria. Furthermore, the idea
of competition may be seen as a western ideology and local firms who do not want to lose their
privileges with the status quo can use this as leverage to help quench the little desire there is for a
competition law to exist in Nigeria. Considering that owners of most big businesses in Nigeria
are connected to the political class it will be easy for this to be done. This also reinforces the idea
of Politician-big business relationship that is predominant in Nigeria.
Also dealing with advocacy is the involvement of the public sector and NGO’s in
creating awareness. It has been discovered that most NGO’s at least in Nigeria (the little present)
view competition law as involving disputes between businesses, hence no direct effect on
consumers. With such perception, most NGO’s dedicate most of their time to issues which are
seen to have a direct effect on the people or viewed to be more important. Issues such as poverty
eradication, promotion of healthy living, assess to good education etc. More so, since it is
difficult to explain to a layperson how issues of anticompetitive practices can directly affect
him/her, matters relating to competition law are often “distant from the consumers’ experiences”
(Dimgba 2008, 23). Thus, to help the cause, it becomes necessary for Nigerians to begin to
develop NGO’s whose purpose is to get the public sector well acquainted with the idea of
competition law and what it tends to do for the society. Furthermore, the issue of stakeholder
sensitization and the need for major stakeholders in Nigeria to accept reforms is necessary for a
competition culture to prevail. This is because just as politicians and the public might be
reluctant towards a competition regime due to misinformation and ignorance, this may also be
the case for stakeholders.
4: Pre-Capacity Building
As a developing country, one of the hurdles often encountered in the implementation of
any project is the availability of capacity to ensure efficient and productive implementation.
Therefore, pre-capacity building is another challenge Nigeria faces in its quest for a competition
regime. This is because like in most African countries that have already, or are in the verge of
23
enacting a competition law there is “little or no tradition of competition, limited capacity to
administer laws, little or no confidence in the legal system, no natural constituency for a
competition agency, a limited budget, little experience with competition and limited human
capital” ( Rodriguez 2004, 9). These issues also act as road blocks even after the law has been
introduced. We will look at that in the proceeding sections of this paper. For now we focus on
the effect on the enactment of the law. Owing to the lack of competition as part of the fabric of
society, there is little knowledge of the discipline in Universities and colleges. As put by
Dimgba, “I am not sure that at the moment there is any university in Nigeria offering
competition law, at degree or graduate level” (2006, 26). Since this is the case, coupled with
other limitations it is obvious that those who are meant to be at the forefront (lawyers,
economists etc) lack proper understanding of the discipline. Such situation will also affect the
proper enforcement of the law when in is finally passed, if it is ever passed. From the above it is
also fair to infer that Nigeria lacks the expertise in competition laws and economics which are
disciplines necessary for proper interpretation and enforcement of competition laws, including
issue relating to institutional organization.
What is more, the early years of a competition regime are very crucial in terms of
establishing credibility and garnering support from civil society. Thus it is necessary for Nigeria
to be well prepared. One dreads seeing such an important law to be enacted, and in its early
stages there is no other choice but to consult or employ specialist from abroad. Not that this is
entirely frowned upon, but again its high time Nigeria begins to take responsibility in its own
developmental goals. After all, the country has already spent so much money from contracting
foreign firms to draft its competition bill such as the Federal Competition Bill drafted by EU and
Associates based in Washington DC USA. Instead of putting so much money in outside pockets,
this money should be spent in capacity building projects within the country and training
Nigerians who can draft such laws and see to its implementation.
To build capacity before the enactment of the law, there is the need to acquaint present
and future lawyers, economist, politicians and legislators with the discipline of competition. This
can be done through the introduction of competition law modules in various universities in the
country. This can be carried out as part of an economics class or independently. Such modules
should also be implemented in law schools, at least at the general level and may be made
compulsory for first year law students. Those that pick interest in the area can specialize and
those that do not can move on to a different area of law. During the process of this study I
consulted with some present law students in Nigeria and they confirmed that competition law is
presently taught at the Master level. This indicates that law students are not introduced to the law
of competition; only students who wish to get into a master degree program. The problem with
this is that even if a student is willing to pursue competition law at the master level, it is still wise
to introduce the subject at earlier stages say- within the first year of law school. Economic
students at the undergraduate level should also be exposed to the area so they can get an idea of
what they are seeking a master degree in. Thus, it is necessary for classes in competition law at
least the basics to be available to first year economics and law students in order to give them a
feel of the discipline, and then those who are excited about the discipline and wish to have a
career or specialize in the field can go ahead and pursue it at the master level and beyond.
Dimgba indicates that the Nigerian Bar Association’s (NBA) section on business law has a
24
committee on competition law, (Dimgba 2008, 28). However this is not enough as it is still at the
upper academic level.
Additionally Nigeria can build capacity by seeking technical assistance from international
organizations such as the WTO, OECD, ICN, UNCTAD, IMF and the World Bank, who are
more than willing to assist developing countries in the process of creating a competition regime.
It is also helpful to seek assistance from developed countries in the European Union (EU) and the
United States, including South Africa that have well functioning competition regime and are also
willing to share their knowledge on best practices. Technical assistance programs from these
organizations and developed countries can go a long way to provide the training required for
rigorous legal and economic analysis which is of paramount importance for any competition
regime. It should also be emphasized that the primary aim of seeking technical assistance should
not be focused on enacting a competition law, but also to help the discipline of competition to
permeate into the economy. This will help to alleviate some of the challenges facing the country
and will also aid in creating a natural constituency for a competition agency. Most importantly,
any form of technical assistance has to be tailor-made for Nigeria, taking into account the
uniqueness of the economy and its capabilities.
5: Monetary Cost
It is not farfetched to infer that if the political will is present, Nigeria has the financial
capability to enact and implement a competition law. However, due to the fact that no amount of
money is ever enough, and the idea that money can be used for other more pressing needs, it is
not implausible to attribute the varied view and acceptance of the law in Nigeria to monetary
cost. Before enacting a competition law, any country has to take into consideration all sorts of
cost that may be involved in the process. This requires carrying out proper calculation. If not,
decisions are likely to be distorted among legislators and politicians (Rodriguez 2004, 20).
Additionally, the supposed long term advantages to competition policy once compared with the
time value of money can be seen by policy makers to be too small to justify the cost of
implementing a competition regime. This is coupled with the fact that once a competition policy
and law is created it is irreversible (Rodriguez 2004, 20). Moreover, the presence of various
regulatory institutions that have been put in place to handle competition issues in various sectors
such as; the NIPC, NCC, CBN, SEC, CPC, the Special Trade Malpractices Investigation Panel
etc (Adedeji 2006, 270) can be seen as a way to curtail the cost of enacting a full fledge
competition law, at least till there is enough confidence that such law is worth the cost.
Nevertheless, policy makers need to understand that these regulatory institutions cannot replace
the need for a competition law in the country.
Part Four: Challenges towards Effective Enforcement
Part three of this study has highlighted the challenges prima facie that Nigeria faces on its
quest for competition legislation. However, a society does not begin to harvest the fruits of a
competitive economy by mere enactment of a competition law; rather the fruit tree is still
growing as there is the need for proper enforcement of the law and institutional building. Thus
there is the need to highlight some of the hurdles Nigeria will have to overcome when its
competition law is finally enacted in order to reap the fruits of competition law. This will be the
25
focus of this section of the study. According to Gal “antitrust is like a flower: in order to bloom it
needs soil (a supportive socio-economic ideology), pesticides (tools to limit political economy
influences), and water and sun (efficient institutions)” (2010, 417). With this analogy in mind,
part three of this paper has addressed the type of soil needed for competition to bloom In Nigeria,
and ways to get that soil, including some pesticides that have hampered the enactment of the law.
This part of the paper will go on to address some of the pesticides after enactment and most
importantly the issues of enforcement and institutional building.
According to the OECD Secretariat, institutional challenges “include various factors that
prevent a competition authority from performing its duties in the most effective way. This may
include; insufficient institutional and budgetary independence; overlapping jurisdiction with
other regulators, or unclear division of responsibilities with other regulators; relations between
the courts and competition authorities; insufficient investigatory or enforcement powers and
other factors that hamper effective operation of the authority like insufficient resources or
difficulties attracting and retaining qualified staff” (2004, 1). These challenges will be elaborated
on in this section of the study including how these challenges will specifically affect the
implementation of competition law in Nigeria.
1: Foreseen Challenges
The greatest component of a competition regime is the effectiveness of enforcement. This
entails a well to do institutional and procedural framework. Whether new or old, a body of
competition law is only as good as the institutions given the responsibility to enforce those laws
(Trebilcock and Iacobucci 2010, 455). Thus it is necessary for new competition regimes to take a
thorough look at “institutional prerequisites” necessary for effective implementation. This is
because any country looking to implement a competition regime may have a well crafted law,
but inadequate attention to institutional and operational aspect of the law can lead to a weak
competition regime (UNCTAD 2011). As a result, countries have to look at the institutional
aspect of enforcing a competition law during its enactment stages. The key important factors to
developing a strong national competition institution have been identified by CUTS to include;
Technical competence of professional staff in the competition agency, including lawyers
and economist.
Availability of resources to enhance enforcement capability
Credibility of the institution
Autonomy/institutional independence
Capacity, preparedness and will to take action (Mehta 2003, 22).
As has been mentioned earlier in this study, countries introducing competition law for the first
time (especially developing countries) face a lot of challenges pre and post enactment. Thus, it is
necessary for these countries to try as much as possible to get things flowing in the right track
during introduction. To do this, mechanisms have to be put in place to deal with some of the
foreseen challenges. Being that Nigeria is not an exception to these challenges in its quest for a
26
competitive economy, this paper will attempt to show below that Nigeria to a certain extent lacks
some or most of these key important factors which have been identified by CUTS. Accordingly
ways to make up for such shortage or lack of these factors will also be suggested.
2: Resource Constraints/Scarcity
Gal mentions that “the scarcity of both human and financial resources constitutes an
important obstacle to establishing an effective system of antitrust enforcement” (2010, 420-421).
These resources are however essential because the development of technical competence of
professional staff which include lawyers, economists and other business personnel to man the
enforcement of competition law is necessary at the early stages of a competition regime. Such
competence is necessary for carrying out duties efficiently and expeditiously (Mehta 2003, 22)
and it is dependent on the availability of human and financial resources in a country. Therefore, a
mixture of poorly equipped institution with limited expertise in competition law and economics
which requires complex analysis of market conditions and consumer welfare is likely to breed
bad decisions (Gal 2010, 420). For this reason, there is the need to have the necessary human and
financial resources to carry out enforcement issues, and to also aid the development of technical
competence among staff.
2.1: Human Resource Constraints
As mentioned previously there is a lack of proper understanding of the rules of
competition in Nigeria due to limited education in the field. There is no doubt that this limitation
has a major role to play in the delay in the enactment of the law. Deficient understanding of
competition will also hamper effective enforcement when the law is finally enacted. This is
because even though an institution is set-up during or after enactment, so far as those put to man
the institutions are individuals who do not possess the needed knowledge to understand, analyze
and apply the right skill to specific cases, the regime will not live up to expectations. Gal has
pointed out that inter alia, adequate technical competence is needed in the part of lawyers,
economist and investigators in order to avoid the effects of erroneous decisions. This is because;
(a) erroneous decision making by a competition institution might have an impact on the incentive
of other market players to engage in “precompetitive or neutral conduct” if it’s mistakenly found
to be anticompetitive. On the contrary such mistaken decision can strengthen the incentive of
market players to engage in anticompetitive behavior if such acts are labeled to be legal as a
result of erroneous decision making. (b) Erroneous decision making can also damage the
reputation of the competition agency, especially when it cannot effectively enforce the law due
to difficulties in justifying cases brought to the courts (2010, 424). This may cause the public to
lose faith in the system, which can be damaging to the institution.
Furthermore, the lack of knowledge in competition law in Nigerian courts will pose a
major problem, which will inter alia cause unnecessary delays in competition hearing and
rulings. This may be displayed in situations where judges intentionally refuse to take on
competition cases or make haphazard decisions due to lack of training. Thus having in mind that
often, competition cases involve rigorous economic analysis, and may take a very long time
before cases are decided, judges who are properly trained are necessary for proper judgment. For
example, on its pursuit for a competition regime, an assessment of Mozambique’s judicial sector
27
showed that “the most significant problem facing the sector as a whole is the relative lack of
skilled human resources” (Rodriguez 2004, 19). More so, the lack of relevant skills in the
judicial sector can create reluctance in taking cases that require economic judgment. This can
create a vicious cycle whereby courts never gain experience and cases are not sent to the courts
(Gal 2010, 424). This will likely be the situation in Nigeria if things are not done to correct such
circumstances before enactment of the law. Additionally, the lack of human resource will also
take a major toll on enforcement efforts. This is because to identify anticompetitive practices in
the market, a competition agency requires skilled staff. These staff must be able to handle
complex questions and/or complaints which may follow, and at the same time carry out analysis
necessary to pass judgment. As indicated by the Asia-Pacific Economic Cooperation (APEC),
reluctance in various developing countries in applying antitrust is due to lack of know-how in
competition cases and the difficulty that they will encounter in handling cases which require
economic analysis and judgment (Gal 2010, 424). To curtail such difficulty Nigeria has to begin
to equip those who will man the institution and education is the key.
Limitation in human resources also affects post creation of a competition culture. This is
because due to a lack of sufficient staff, an agency might not see the importance of advocacy as
it may view anticompetitive practices in the market as its core focus. This view can be
detrimental to the agency as the promotion of advocacy is often seen to be more important than
inhibiting anticompetitive behavior through enforcement (Gal 2010, 424). More so, insufficient
staff can also hamper the agency’s ability to promptly respond to queries, data collection and
request, including other issues relating to enforcement. But without the financial capability it is
difficult for any country to hire sufficient staff and also fulfill other financial requirements which
competition agencies require.
2.2: Financial Resources
The limitation of financial resources plays a huge role in the amount of staff an agency
can employ due to salary requirements. Dimgba indicates that, if the competition body is able to
overcome the challenges of skill constraint after its initial years, the retention of skilled staff is
likely to pose a problem. This is because on the one hand, after gaining experience such staffers
will become attractive to private law firms and businesses which will offer attractive salaries
which beats working for the agency (2008, 27). On the other hand though such a loss may affect
the agency, the dispersion of experts domestically will help to further cultivate a competition
culture. This can have a domino effect in the economy as a whole. Additionally, it will help to
bring in international know-how as some staffers are likely to be employed abroad and then
bring back their experience which will ultimately support the development of a competitive
economy (Dimgba 2008, 27). More so, the lack of finances will also create difficulties in
enforcement especially when it comes to ex officio cases. This will constitute a major obstacle in
carrying out finance intensive activities such as; analyzing the effects of alleged monopolistic
behaviors, creating enforcement guidelines, and analyzing the effects of mergers (Gal 2010,
425). Thus the antitrust agency may begin to engage in selectivity of tasks which may cause the
agency to forego otherwise important cases and activities.
2.3: Prioritization
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Prioritization often arises due to the lack of sufficient staff or finances. For this reason,
agencies begin to select which cases to pursue. Such a behavior could be good or bad, depending
on what is foregone, and how necessary it is for the goal of competition which we know as
economic efficiency and welfare enhancement. While no jurisdiction has all the resources or a
perfect competition regime, a properly endowed regime can go a long way to ensure and aid
effective enforcement of competition laws. For example, the Zambian competition regime has
done well in applying its laws due to its resource endowment in the area (Gal 2010, 425).
Conversely, reports show that Malawi has not been able to realize the objective of its
competition regime due to a weak competition agency which has not been able to effectively
implement the laws (OECD 2008, 7). This difference in results shows the necessity of having
adequate resources to enforce competition law. This is because resource availability or scarcity
often determines how effective a nation’s competition regime operates. It also prevents
prioritizations that may be detrimental to the regime. The limitation of resources is a major
obstacle Nigeria will have to face on enactment of its competition law, and the earlier Nigeria
realizes this and begins to do something about it, the better.
3: Institutional Autonomy/ Independence
When it comes to decision making, the independence of a competition agency is vital to
regulatory governance. In respect of this, another major factor that will be a challenge to
competition enforcement in Nigeria is the granting of independence to the competition agency to
carry out its duties without political interference. This is because if targets of regulation are
influenced by politicians the country will not be protected from specific anticompetitive
practices, say monopolistic pricing (Rodriguez 2004, 20). Competition law is often regarded as a
“public interest regulation”, however this is not often the case entirely as more often than not
regulators are linked to regulation targets especially in developing countries. To avoid such
influence, the competition agency has to be shielded from any form of political control.
Independence of the regulatory agency is also necessary for unbiased decision making and policy
implementation. This will go a long way in bolstering credibility. CUTS has also indicated that
lack of regulatory independence obstructs the flow of communication between the media and
regulatory agencies as they are often required to go through layers of government for approval
before they can make pronouncements ( 2007, 5). This in turn reduces the regulatory leverage of
the agency as the ability to give the public unfiltered information is reduced. It is very important
to have an independent press, as it is a great advantage in earning respect and credibility for the
competition regime. For example, the Zambian media followed George Lipimile the head of the
Zambian competition institution so closely that his trips out of the country were reported, and a
column on competition was created in a major newspaper in the country (Joekes and Evans 2010,
41). Such action helps to strengthen agency credibility and transparency and is worth emulating.
Furthermore, a competition agency’s independence can also be influenced directly when
instructions are given by a higher branch of government on how cases should be carried out.
Tampering with an agency’s independence can be done indirectly, when decisions are overruled
on political grounds when they do not turn out in the interest of the government (OECD 2004, 2).
Independence could also be restricted indirectly when higher branches of government have a say
in the nomination of agency heads and other leading authorities within the agency, or more
directly by being able to remove them from office. At the same time the allocation of budget to
29
the agency can be an avenue through which independence is limited as well. For example if the
agency’s budget is cut as a result of a decision which it made that other political figures or higher
governmental branches do not favor, then independence is being restricted (OECD 2004, 2). As a
matter of fact, anything that hinders the agency from making decisions the way it sees fit
according to the law limits independence and should be avoided.
Other important issues that may be influenced by the level of independence granted
includes; the problem of corruption and transparency. Dimgba has pointed out that in Nigeria
where corruption is predominant, the challenges of political interference garners more attention,
increasing the risk of “regulatory capture” (Dimgba 2008, 25). Government interference is often
due to the fact that some politicians may have attachment to businesses involved in
anticompetitive practices. When these businesses are undergoing investigation these politicians
may be inclined to do whatever they can to influence such investigation or its outcome due to
such relationships. This may lead to biased decisions which raise questions on transparency, due
process, justness in law administration and selection of agency leaders. Thus undue interference
of government officials in cases of competition law enforcement harms the transparency of the
agency, which in turn taints institutional integrity.
To sum up, it should be noted that total independence is often not realized in any
jurisdiction whether developed, developing or transitional due to the fact that competition
authorities are often part of the administrative arm of the government. Also, considering that the
impact of decisions is usually felt by the general public will often call for political interference
(OECD 2004, 21). Irrespective of this, UNCTAD’s model law on competition is founded on the
notion that the most efficient competition administrative body is probably one that is an
independent body of the government, and has the powers to conduct investigations and apply
sanctions, but at the same time giving room for judicial recourse (2011, 6). This is to avoid
undue political interference that will jeopardize effective enforcement, integrity and credibility of
the competition authority. It is important that Nigeria follows this model in its quest for a
competition regime.
4: Jurisdictional Overlap/Conflict
Evidence has shown that unlike competition authorities in developed countries,
competition authorities in developing countries are often in conflict with other government
created regulatory agencies. This is coupled with the vested private interest these agencies have
created prior to introduction of the competition authority. As a result, what we see is a situation
where government is at logger-head with itself. This is quite different in developed countries
where the war is with the private sector and its practices (Trebilcock and Iacobucci 2010, 469).
The effect of such a situation is that new competition authorities often face difficulties in
establishing themselves in such an environment as they fight to overcome “vested interest of
regulatory capture in the framing of their legislation (carve-outs or exceptions for economically
and politically influential sectors) or in the efficacy of their enforcement efforts” (Trebilcock and
Iacobucci 2010, 469). Such a situation reinforces the need for a competition authority to be
independent as has been addressed above.
The competence to enforce competition law should lie in the hands of the competition
authority. However, this is often not the case as developing countries with existing competition
30
regimes have often cited jurisdictional conflicts between the competition authority and sector
regulators. For example Argentina has reported that although there is no jurisdictional overlap
with the competition authority and sector regulators, but experience has showed that there is
sometimes a problem of identifying whether an anticompetitive practice falls under the
jurisdiction of the competition law or the regulatory framework of that sector (OECD 2004, 4).
More so, and most important as this is likely to be a specific problem in Nigeria is Columbia’s
report concerning the problem of numerous rules regulating economic activities and competition
in various markets, and the large number of institutions given competence to apply those rules.
Such multiplicity of rules and institutions poses a problem which creates “grey zones” whereby
market participants become confused as regards the competent authority to address specific
competition situations (Trebilcock and Iacobucci 2010, 469).
With respect to Nigeria, even though there is no competition law in existence at present,
competition cases and issues in different sectors of the economy are directly or indirectly
handled by various regulatory institutions. There are currently up to 13 or more of these
institutions handling competition cases ranging from investment, communication, aviation,
business malpractice, to tourism and broadcasting (Adedeji 2006, 270). For example the enabling
law of the Nigerian Communications Commission (NCC) contains competition provision which
gives the sector regulators the power to enforce competition related issues in the sector (Dimgba
2008, 29). Unless something is done about this before or during a competition regime is put in
place, this will create jurisdictional conflict. What is more, the telecommunication sector is one
of the most promising sectors in terms of growth in the economy. This makes it vital for such
conflicts to be addressed as soon as possible. Moreover, to avoid the struggle of supremacy it is
important that foreseen conflicting issues between competition authority and other regulatory
agencies are taken care of during the design of competition law, and should be defined properly
without appearing vague or superficial in the statute books.
5: Weak Judicial System
As has been touched on earlier, due to the complexities of business practices, competition
cases require a very high level of experience, sophistication and tolerance by not only the
prosecution or defense but by the judges on the bench (Rodriguez 2004, 19). With such
requirement, a country with a weak judicial system offers little assurance that it can handle the
sophisticated review of competition cases. Being that this is often the case in must developing
countries, a weak judicial system becomes a major challenge for effective enforcement of
competition law in Nigeria. According to Trebilcock and Iacobucc it is a unanimous view
expressed by developing countries that “the judiciary is a major stumbling block of effective
competition enforcement— the judges do not understand competition law and are content to
avoid the necessity to learn through diverting competition issues into a maze of esoteric
administrative and procedural side-streets out of which the substantive matters at issue rarely
emerge” (2010, 467). Another problem is the perceived corruption in the bench, which could
cause biased decision that can affect enforcement and the spirit of the law. Such can also pollute
the zeal of investigation officers to carry out their job to their best without feeling that their work
means nothing at the end due to possible biased decisions by a corrupt bench.
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One has to point out that this is not entirely the case in Nigeria. To infer so will be
robbing the country of the Kudos it deserves for its work in improving transparency in the
judicial system and other sector of government. Evidence of this was seen during the 2007
elections in which opponents who doubted the polls where able to bring their case to the courts
where it was properly handled. However the issues of experience in economic analysis and the
ability to make decisions related to sophisticated business practices still resonates, and will be a
major challenge in the Nigerian bench whenever a competition regime is finally put in place.
Thus relevant authorities have to be aware of this and begin to fix such limitation through the
introduction of competition modules to future lawyers and judges.
6: The Informal Sector
Another issue worth mentioning is the presence of a large informal sector in Nigeria.
These consist of markets or businesses outside the bureaucratic purview. Such businesses are
either not registered or do not pay income or property tax (Joekes and Evans 2008, 54). They
often make up a large portion of the market in most developing economies which is mostly due
to the existence of arduous regulations or the prevalence of anticompetitive practices which
restrict entry barriers into the formal sector (Joekes and Evans 2008, 54). The Nigerian economy
currently harbors an informal sector of 57.9% and a formal sector of 42.1%” ( Dimgba 2008, 25).
It is indicated that these sectors often put pressure on prices and competition due to the fact that
items sold by this sector are smuggled goods. While other (formal) sellers in the domestic market
have to go through paying import duties, taxes and charges on legal imports, the government
keeps a blind eye on smuggled goods which is highly unfair (Rodriguez 2004, 16). This also
brings about a disadvantage to formal sellers. Below are some of the implications of this sector
to effective competition enforcement;
It creates dual markets and may cause distortion in the analysis the authority conducts
for formal markets.
Formal firms with significant market power may be overestimated due to an
underestimation of the price elasticity of demand, and the difficulty in establishing
the relevant market, due to the informal sector.
A large informal sector also creates distortion in price information which can make
cartel analysis more difficult (Rodriguez 2004, 25-26).
In order to properly enforce competition law in Nigeria such a situation will have to be
addressed. This can be done through bureaucratic reforms and providing incentives for firms to
become formal and by other government measures. Competition enforcement cannot do too
much to aid such situation. This has to be carefully looked into. Otherwise, the competition
authority will have significant problems when attempting to identify market participants when
assessing the competitive environment.
In summary, the challenges that face a new competition regime do not end with only
those that have been identified above. Nigeria is bound to face other challenges as its regime
grows. However, for the specificity of this study, these challenges could be seen as the most
pressing at the birth of the regime. If Nigeria is able to put a framework in place to help tackle
32
these challenges, by inter alia the adoption of best practices from other countries that could work
for Nigeria, then the benefits of having a competition regime will be realized gradually and
proceeding challenges will be taking care of easily. This study will now go on to suggest some
ways to tackle these challenges.
Part Five: Suggested or Partial Solutions to Foreseen Challenges
One cannot fail to mention that most of the early challenges competition regimes face is
often intertwined. Therefore finding a way to resolve one issue can have a trickledown effect by
helping to eliminate other challenges. The proposed solutions below are intended to have such an
effect on the challenges indentified to be pertinent to Nigeria as a competition regime is enacted
and enforced.
1: Drafting the Law and Institutional Design
In drafting its competition law Nigeria must avoid the temptation of borrowing from
developed countries or any other country for that matter. As mentioned by Trebilcock and
Iacobucci, developing countries seeking to adopt a competition regime for the first time often
borrow heavily from developed countries in designing their laws. As a result when applied the
legislative framework does not fit the realities of the jurisdiction the agencies are created to
regulate (2010, 466). Therefore, from the onset Nigeria has to be aware of the problems and
challenges such act of borrowing can pose on the competition authority when enforcing the law.
To avoid heavy borrowing, Nigerian lawyers, economists, and other stakeholders who are
enlightened on issues of competition have to be actively involved. This is not to say that officials
or consultants from countries that have well functioning regimes (mostly developed countries)
should not be consulted for reviews and opinions, they should— but they should not be given the
responsibility of producing the entire law. This is because those who live, buy, sell, and are
involved in various market transactions in the country are in the best position to produce a
practical law that addresses the realities of the country. Not a law solely based on theory that
does not pay attention to jurisdictional realities.
2: Resource Scarcity and Capacity Building
There is a popular saying that “where there is a will there is a way”. This saying greatly
applies to the issue of competition law in Nigeria. As mentioned earlier, Nigeria has the financial
resources (for a developing country at least) to put in place an efficient competition regime if the
will is there. However, when it comes to human resources there are more limitations than the
former. On this note, it cannot be emphasized enough that a major solution to this challenge of
capacity building is creating a competition culture. This can be done by implementing aggressive
competition advocacy campaigns in every region of the country by various stakeholders. As
advised by Kovacic and Eversley, a country with weak initial resources can begin its regime with
a more stern competition policy, emphasizing advocacy and education and forbidding a narrow
range of anticompetitive behavior such as supplier cartel agreements or merger analysis which
proves to be the most resources-intensive activity for new agencies (2007, 9). But as resources
begin to grow and educational level is heightened the law could be augmented. In order to build
capacity and avoid chewing more than the agency can swallow in its early stages, any agency
created in Nigeria to handle competition issues has to apply a gradual approach to competition
33
issues. This entails gradually taking on more complex anticompetitive conducts as resources and
expertise grow. To build capacity, advocacy is needed. Hence some of the outlets through which
competition advocacy can be carried out may include, but are not limited to;
Media: the media (advertising, literature, handouts etc) can be a strong outlet used to
create awareness on the need to have a competition regime in the country by
highlighting various anticompetitive practices going on in the country, its effects to
consumer welfare, and how it could be prevented through a competition regime.
Doing so will help to educate the masses on what competition law is and what its
aims are. More so, on creating the competition authority, these same outlets are also
useful in informing the public of various decisions and works being carried out by the
agency. However, this also touches on the issue of the agency’s independence in
terms of interacting freely with the media as indicated earlier.
Means of Dissemination: it is necessary to have various institutions that can help in
creating awareness before and even after the competition agency is created. This is
because the agency cannot do it alone. Thus, various institutions such as the CPC, the
NBA, CEON and other stakeholders have to be encouraged to join in awareness
creation (Mehta 2003, 24-25). All the same, one cannot ignore the efforts by the CPC,
CEON and the 7-Up projects sponsored by CUTS international so far. These
organizations need to be supported by the Nigerian government, NGO’s and other
international organization to boost their efforts.
3: Education
Education has a great impact on the level of expertise and expertise on competition law.
To deal with this challenge courses in competition law need to be introduced in the curriculum of
university students studying economics and law. So far as mentioned by Dimgba the closest to
any competition module in existence in legal education in Nigeria is the NBA’s section on
business law which has a committee on competition law (Dimgba 2008, 28). This is not enough
as there is the need for more educative tools even outside the walls of academic institutions.
Thus consumer organizations need to be involved in the educational field through seminars and
case studies. Nigeria should also seek to take advantage of other means to educate the public on
competition principles, such as the training courses being offered by CUTS on competition and
regulations and other consultancy and research programs being offered (Mehta 2003, 2-26). The
outcome of such engagement is that it helps to create a pool of professionals and students who
are aware of the discipline and can go on to help in creating a competition culture in the country.
On creating the competition authority, there is the need to continuously educate the staff
on competition issues to ensure effective enforcement. This can be done through case study
seminars in which agency staff are required to look at competition issues going on in other
jurisdiction and how it was resolved. This will help in giving them a well-rounded view on ways
to tackle anticompetitive practices. It will also help in figuring out other ways to handle such
issues when it occurs in Nigeria. Such seminars can also be designed in a way that it deals with
different types of abuses in one category and examples brought in from different jurisdictions to
help train competition staff and other stakeholders (Mehta 2003, 26). It is also very important to
34
promote an analytical culture within the agency, especially for a new regime. This will help the
agency to garner experience from international agencies as well. The government has to also
help in providing the tools through which these analyses could be carried out. Furthermore,
providing avenues through which competition regimes are able to get a taste of competition
issues dealt with by other jurisdiction helps to expose agency staff to new issues such as in rule
of reason”3 cases and how to deal with them.
Another way to aid the acquisition of knowledge is through the exchange of officials.
This could be done through an annual scheme whereby agency staff after spending maybe one
year at home, they go abroad for a year to other agencies and work then bring back the
knowledge they gained from abroad. As reported by CUTS, it is useful for the staff of new or
underdeveloped competition authority to see how other agencies handle cases. It is suggested
that such exchange program could be done on the one hand, by taking officials of new or
underdeveloped competition agencies, and offering them internships opportunities in the
competition agency of other countries where they can acquire more knowledge through hands on
experience. On the other hand, experts from developed competition agencies can visit
underdeveloped agencies and guide them in handling cases for a specified period of time (2003,
27). However, the problem of lost knowledge may occur in this scheme when officials refuse to
return after acquiring the necessary knowledge. To handle such issues, it is reasonable to
establish a contract between the individual and the agency or the government. More so,
confidentiality issues may pose a stumbling block on both sides for an easy transmission of
knowledge. Nevertheless, in the midst of such stumbling blocks, the positive outcome of such a
scheme is greater in terms of building capacity.
As for lawyers and judges, on enacting the law and subsequent design of the institutions,
opportunity should be made available for them to attend lectures, and receive write-ups and/or
handouts on competition cases and analysis. This will help them to get better acquainted with the
discipline of antitrust and also keep them abreast of competition issue in other countries. Such
step is necessary because on the one hand, judges on the bench will have to decide competition
cases either in general courts or as part of an independent tribunal depending on how the
competition institution is designed. On the other hand, lawyers will have to appear before the
authority or courts to argue their cases. Hence, the authenticity of the regime has a lot to do with
how well these two sides understand and apply the law. Other additional ways to build capacity
will be through seeking technical assistance from international organizations. These may include;
the WTO, UNCTAD, OECD, ICN, IBA etc. To move ahead, Nigeria has to try to seize every
opportunity to be actively engaged in seminars and lectures offered by these organizations on
competition issues. Also, Nigeria has to conduct capacity building programs in order to get
financial and technical support through international and regional cooperation.
As indicated by CUTS, the South African competition authority building and its
wonderful surrounding was made possible through donations from Norway. Such donations also
help them to organize seminars and lectures, which has aided tremendously in cultivating a
3 Rule developed by the Sherman Antitrust act, which emphasis that only mergers and contracts which unreasonably restricts trade are susceptible to antitrust actions under antitrust law, and that monopoly power is not inherently illegal.
35
competition culture in South Africa. The same goes for Tanzania whose competition agency’s
life has been guided true donations and grants from the UK’s Department of International
development (DFID) and the Swedish International Development Cooperation Agency (SIDA)
(2003, 30). In terms of regional cooperation, the Economic organization of West African States
(ECOWAS), which Nigeria is a part of, can be an engine through which competition awareness
is created and capacity built through networking and integration of rules. A good example of
such initiative in Africa is the Southern and Eastern African Competition Forum (SEACF) which
is used by its members for information sharing and corporation, and as result aids capacity
building (Mehta 2003, 30). The need for capacity building is vital to the efficient functioning of
any competition regime pre and post. Thus, it is necessary for countries like Nigeria which are on
the verge of possibly enacting a competition regime to realize the need to begin to educate the
population through every means necessary. Such initiative will help to uphold an effective
regime when it is put in place.
4: Independence/Autonomy
To keep the authority free of political interference and overwhelming control there is the
need to completely make the agency independent from other government bodies, but at the same
time ensure that decisions and actions are properly reviewed by the courts. (Rodriguez 2004, 20-
21). Additionally the competition authority can be established separate from the government
ministries to avoid interference. This will help foster functional independence in decision
making. Care should also be taken in the appointment of staff in order to avoid those who are not
able to resist corruption, or those who have conflicting interest that can undermine the reputation
of the agency. As pointed out by Dimgba, those chosen to lead the institution are crucial in
realizing the agency’s mission; “is trite but true that the commission can be no better than its
leaders, and also the quality of the members is the most vital single factor in the successful
operation of these commissions” (2008, 25). One way to ensure personnel independence would
be to let the competition authority employ its own staff instead of requiring employment from a
government body. UNCTAD’s Model law on competition indicates that to avoid this conflict of
interest many states have indicated in their laws that employees of the institution should not have
interest that may conflict with job functions ( 2011, 8). For example;
In India it is indicted that a person should not have any financial or
other interest likely to affect prejudicially his functions. In
Germany, members must not be owners, chairmen or members of
the board of management or supervisory board of any enterprise,
cartel, trade industry association, or professional association. In
Hungary, the president, vice-president, competition council
members and other civil servant staff members of the competition
Authority may not pursue activities for profit other than those
dedicated to scientific, educational, artistic, authorial and inventive
pursuits, as well as activities arising out of legal relationships
aimed at linguistic and editorial revision, and may not serve as
senior officials of a business organization or members of a
supervisory board of directors (UNCTAD 2011, 8).
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These are some of the legislations Nigeria can adopt within its competition law to ensure that
personnel chosen to man the institution are able to conduct functions without a conflict of
interest. Autonomy can be improved by conducting seminars on competition and regulatory
issues. This will help to create awareness on various harms that may befall a competition agency
without proper staff and leadership— and giving an illustration on how this can be detrimental to
the entire regime. Such seminars can be used to introduce modules whereby best practices from
other countries are introduced and their success and failures in application are highlighted. It is
indicated that similar programs are being organized by the WTO; UNCTAD (Mehta 2003, 28)
etc. Nigeria has to do all it can to reach out to these organizations for help and guidance on such
issues.
The need for independence cannot be emphasized enough especially for a country like
Nigeria where corruption is a living reality. Thus, it behooves the government to vindicate itself
from these perceptions by ensuring institutional independence of any competition agency that is
created in the country, whenever it is created. The implementation of a competition regime in
Nigeria deserves to be free of corruption or any form of regulatory capture. This is necessary to
ensure that the benefits of such a law are realized. This will require the application of some of
these suggested solutions during legislation and after enactment into law. Looking at the bright
side, just having a good enforcement program can also help to deter corruption. For example if it
is explicitly stated in the law that government officials are not allowed to discriminate when it
comes to access into the Nigerian market. Such a provision in the law can prevent the formation
of corrupt agreements between public officials and business owners. By so doing, the
competition policy mechanism will pose an obstacle for government officials to fulfill any form
of promise to the private individual or the payer of bribe to provide unlawful economic
privileges (Kovacic and Eversley 2007, 8). In essence the presence of a competition law reduces
stable relationships between public officials and private individuals that often promulgate corrupt
practices.
5: Dealing with Jurisdictional Overlaps/Conflicts
One of the major ways to avoid conflicts between competition authority and sector
regulators is by setting rules on “competence, procedures, and priorities”, or initiating a process
whereby there is a system of cooperation or agreement between both sides (OECD 2004 3).
Another way is to set completely specified jurisdictional boundaries. The process of having a
detailed communication mechanism which puts the competition agency and the regulatory
agencies into an agreement seems to be the most appealing. For example, the South African
Competition Commission operates under this formula. As a result, the agency has signed and
negotiated various memoranda of understanding with all sector regulators, defining their
jurisdiction and how they should operate on competition issues concerning firms in their sectors.
This understanding emphasizes a collaborative and communiqué approach (Dimgba 2008, 29).
Such method rids the government of a war with itself, and directs all focus to the task of solving
competition issues as a unit. This approach directs all resources to tackling competition issues,
the overall development of competition regime, and the country as a whole. A tailor-made
institutional design can also help to correct jurisdictional overlap.
.
37
6: Proposed Institutional Design for Nigeria
“Competition Law is like a fortress; it should be properly built and manned to protect its
citizens” (Gal, 2010)
On enacting its competition law, Nigeria has to make sure it pays proper attention to the
institutions it creates to enforce the law. This demands that the institution is organized and
designed in a way that encapsulates the present realities of the country including its economic,
social, political and cultural state. With this in mind, and realizing the lack of expertise in the
area of competition law in Nigeria, this paper proposes that when putting in place a competition
institution it is wise for Nigeria to adopt the Integrated Agency Model (henceforth referred to as
the integrated model). There are three main institutional models competition authorities normally
adopt (a) The bifurcated judicial model, (b) The bifurcated agency model and (c) The integrated
agency model (Trelbilcock and Iacobucci, 459-464). The integrated model is an institutional
structure in which the competition authority is “empowered with both investigative and
adjudicative functions, with rights of appeal to general or specialized appellate bodies”
(UNCTAD 2011, 3). The integrated model has been proposed because it is administratively
efficient and will help to harness expertise, which is extremely lacking and is a vital component
as the institution matures. In its early stages, human resource capability is an essential
component for a competition agency. This is because it aids in building a solid foundation that
strengthens institutional credibility. As a result, adopting an integrated model creates a system of
cooperation, which allows investigators and adjudicators to feed off the knowledge of each other.
This fosters easy and quick learning through the involvement in both aspects of enforcement.
Trebilcock and Iacobucci also concur that the integrated model is bound to increase the
level of expertise amongst agency staff and commissioners. This is because they are involved in
all aspects of the administration of competition law instead of an infrequent contact with
competition policy (2010, 463-470). This is contrary to other models such as the bifurcated
agency model which is resource intensive due to the high level of fragmentation. Also,
adjudicators are only involved in small fractions of antitrust matters which actually lead to
formal proceeding (Trebilcock and Iacobucci 2010, 463). At the same time, the creation of
specialized competition adjudicative authorities which is necessary in a bifurcated agency model
is likely to be a heavy task for a new regime to successfully implement. Furthermore, the
expertise which can be realized through the integrated model, apart from helping in adjudication
can also aid in policy-making, through the dissemination of guidelines. By instituting a multi-
member commission like most integrated agencies, a high level of accountability and
consistency in decision making is bound to be realized which will help to build credibility and
administrative efficiency (Trebilcock and Iacobucci 2010, 464). This is very important for proper
enforcement.
Trebilcock and Iacobucci have indicated five key questions that any institutional
structure chosen by a jurisdiction is required to address. These questions will be answered to
further justify the reasoning as to why the integrated model suits Nigeria more than the other
two. The first question deals with who is responsible for investigation and initiation of
proceedings. This seems to be the easiest as it is extremely clear from the integrated model that
the authority is empowered to investigate and adjudicate proceedings. This structure allows more
38
hands to be on deck, especially in the investigative part as adjudicators are able to give
preliminary insights during investigations because they are in constant contact with investigators.
Such cooperation will also help to make investigations faster, and enhance prioritization since
adjudicators are able to indentify anticompetitive practices which are worth pursuing taking into
account resource scarcity. Second, who hires competition policy bureaucrats, and who do they
answer to? Implementing the integrated model allows the competition agency to be independent,
with its own budget and the power to hire its own staffs that are answerable to the agency
according to its policies. Such structure is necessary in order to reserve some form of autonomy,
avoiding undue political interference.
Third, what body adjudicates contested proceedings and what process does it follow? The
integrated model empowers the competition authority to adjudicate proceedings. For a country
like Nigeria where knowledge in this area is limited the integrated model is more appealing
because it enables a new regime to work with what it has. This will permit an integrated process
which allows both investigators and adjudicators to work together in both functions. As a result,
both parties will move up the learning curve faster, while ensuring an administratively efficient
enforcement scheme (UNCTAD 2011, 4). On the contrary, if the bifurcated judicial model is
applied, empowering courts of general jurisdictions with the task of adjudicating will be
detrimental to the regime because it is likely that most of the judges and (or) lawyers will lack
the necessary knowledge to carry out the work properly. Using the bifurcated agency model
requires a specialized set of competition adjudicators which as elaborated above is not a wise
choice due to resource constraints in Nigeria.
Fourth, to what extent is there for judicial review of competition decisions? The
integrated model permits parties to appeal the decisions of the competition authority to general or
specialized bodies. Taking the EU as a prime example, parties have the right to appeal to the
Court of First Instance, then to the European Court of Justice. Such an adjudicative process
enables parties to appeal on the decision twice which helps to encourage fairness and
transparency. It also corrects natural justice or due process concerns. Thus, by having an
integrated model, Nigeria can implement a system whereby parties are allowed to appeal
decisions at the Federal Court of Appeal and then at the Supreme Court. Fifth, what role is there
for political review by elected officials of competition agency decisions? (2010, 463) Since the
integrated model allows appeals to appellate bodies, the only room given to elected officials for
review can only be if they are selected as a member of the appellate body. If not, then there is no
role for unnecessary political review on competition agency decisions. This will also help guard
against political interference and corruption.
Due to the versatility of economies of various jurisdictions Nigeria included, one cannot
prescribe an institutional structure that is optimal. This is because in choosing any model a
certain trade-off has to be made. For example, the bifurcated agency model may enhance
decision making by giving a special group of expert judges the sole responsibility of
adjudication. However, this maybe resource intensive where there are courts of general
jurisdiction, which can provide such services. It may also pose natural justice and due process
concerns (UNCTAD 2011, 4). Secondly, the integrated agency model may help train competition
experts, and promote administratively efficiency, but raises due process concerns which are very
important (UNCTAD 2011, 4). Lastly, the bifurcated judicial model encourages a high level of
39
accountability through judicial appeals, and also does well in terms of transparency and
protection of due process, but does poorly in terms of administrative efficiency and expertise in
the adjudicative process (Trebilcock and Iacobucci 2010, 460-461). The integrated agency model
also poses a problem of corruption. This stems from the perception/possibility of bias among
decision-makers within the agency in handling formal adjudicating functions due to their
involvement in prior investigative and enforcement decisions. However, such bias can be
mitigated by making sure that those commissioners who were involved in initiating an
investigation are not subsequently involved in adjudication proceedings of the same case
(Trebilcock and Iacobucci 2010, 464). Hence, there are pros and cons to every model. This
means every jurisdiction has to pay special attention to its level of development and what it seeks
to achieve through its regime before making a choice
Besides, in light of the lack of expertise in Nigeria, the fragility of a new regime and the
need to build a solid foundation early, letting go of some independence is not too bad. This
seems to be a reasonable trade-off in order to establish institutional credibility by harnessing
expertise within the agency in its early years. After all, “it is better to have potentially biased
experts than to have independent but uninformed adjudicators” (Trebilcock and Iacobucci 2010,
470). Furthermore, as human resource increase and the agency becomes rooted in the economy,
if the need arises; the agency model can always be changed to suit the economic realities of the
time. For example Canada dropped the integrated model and adopted the bifurcated agency
model in 1986 when its antitrust law was modernized. This means no model is for life, there is
always room for changed and continuous regeneration (Kovacic and Eversley 2007, 3). But it is
advised that Nigeria begin its competition regime with the integrated model due to the reasons
given above. This is because the positive outcomes envisaged outweigh the problems mentioned
if properly managed.
7: Other Nuts and Bolts Post Institutional Design
Having an effective competition regime requires continuous work even after the
institution has been put in place. As a result, a competition authority has to perform regular
housekeeping within the institution to make sure work is carried out effectively. There is also the
need to always be on the lookout on ways to improve the agency as the idea of competition
permeates the fabric of society. The agency also needs to be able to attract and keep its staff
without losing them to the private sector as competition law becomes more vibrant in the
jurisdiction. Below are suggested ways Nigeria can keep its competition institution functioning
at its best whenever it is established.
7.1: Periodic Reassessment and Stocktaking
It is necessary for the competition authority to be in the habit of evaluating itself both its
internal framework and its enforcement practices to ensure that its tasks are being carried out
effectively. This will aid in making sure that the competition agency’s laws and approach to
enforcement is in tune with the Nigerian economy and conditions in the market place. However,
successful stocktaking and subsequent amendments from stocktaking if need be, will require
inter alia; availability of data on cases initiated, advocacy measures implemented, the result of
such measures and reports issued (Kovacic and Eversley 2007, 3). Such data and information
40
also needs to be collected in an accurate manner that is comparable overtime. Some of the areas
that may need reassessment overtime include; “the wisdom of existing substantive commands,
the adequacy of information gathering powers, the quality of information gathering powers, the
quality of remedies for infringement of the law, the suitability of the mechanism specified for
adjudicating disputes, exemptions, and the distribution of policy making authority among
competition bodies and sector regulators in the same jurisdiction” (Kovacic and Eversley 2007,
3). These are all critical areas, which Nigeria will have to pay close attention to, to ensure
effective enforcement.
In addition, the process of stocktaking will also enable the country to make adjustments
in its institutional design. As mentioned above the integrated model is advised, but may not be
suitable as a permanent model. Thus, there is the need for evaluation of the model, results
achieved, and refinement if needed. Such readjustment will be easily carried out and successful if
stocktaking is done in a timely fashion and properly. For example, a survey of members of the
ICN indicates that most countries have either adopted legislative reforms or other forms of
reform within the first five years of enactment and implementation, or have proposed to do so
(Kovacic and Eversley 2007, 3). This means that regular stocktaking is a necessity if effective
decision-making is to be achieved.
7.2: Setting Priorities
To be effective, it is necessary for any institution to set goals it seeks to achieve within a
given period. This requires the competition agency to be able to strategically illustrate its plans
within a given period of time and how to achieve those plans. This will help the agency to
effectively allocate its resources to the most effective functions especially when resources are
scarce. For example, the South African competition commission has recently initiated a process
to develop a long-range plan to help guide its allocation of resources (Kovacic and Eversley
2007, 4). It is important that even the least funded competition agency set strategic plans that
details what it aims to achieve within a period of time, years or series of years (Kovacic and
eversley 2007, 4) as this is the right path towards an effective regime. This can also be facilitated
through the preparation of annual budget request proposals in which priorities has to be detailed.
Other activities that may involve some form of strategic planning include advocacy campaigns
and other form of awareness creation, educating officials and law enforcement practices.
7.3: Weighing Commitment to Capabilities
From the onset, institutional arrangement must be done in a way that matches a country’s
capabilities. This means that a country like Nigeria should not aim to duplicate an institutional
arrangement similar to a developed country (Gal 2010, 428). This is important especially
concerning a new regime, which is not required to begin to tackle tasking competition cases.
According to Joekes and Evans, new laws should emphasize anticompetitive practices that are
easy to investigate and enforce. Thus, attention to areas such as abuse of dominance which
requires technically complex “rule of reason” procedures when taking action can come later, and
merger control should be the last area to be given attention— that is if it is needed at all (2010,
32). For this reason, commitments have to be made with the aim of avoiding cases that are
resource intensive. At least in the agency’s early years.
41
Kovacic and Eversley prescribe various approaches countries can adopt as it relates to
enforcement priorities. They include; beginning with enacting simple prohibitions against
hardcore horizontal controls such as collusive tendering and as times goes on include other
prohibitions. Or adopting elaborate set of antitrust measures and subsequently expanding
operations to apply more complex commands as the institution grows, which may warrant using
more resources than before. Another way is to initially begin with tackling anticompetitive
practices according to capabilities and resources from the onset (2007, 429). For instance,
Nigeria can begin with taking-on anti-cartel enforcement on domestic cartels. These are all
available choices of implementation strategies in order to make sure that capability is matched to
available resource. The decision to put in place a competition regime does not mean that the
country has to undertake the enforcement of all antitrust measures at least not from the onset.
7.4: Creating a Knowledge/Memory Bank
It is necessary to accumulate a knowledge bank within the agency overtime. This will
help in future decision making and also help train new staff. This can be done through case
histories, documenting and making available in a presentable manner procedures, data collected,
investigative methods and outcomes. More so, investment in competition policy research
development and publication of studies in various interested and vital sectors in order to educate
agency staff as well as government officials and stakeholders (Kovacic and Eversley 2007, 429).
Having a Memory bank is also useful in discovering best practices. It also contributes in
increasing expertise within the institution and its credibility. All this calls for Investment in
information technology, and infrastructural enhancement. This is because for a successful
competition regime in Nigeria to exist, there has to be tremendous investment in information
technology and improvement in infrastructure, especially in electricity and communication
networks. This will aid data collection, its availability and research. Also, most information is
available through internet access which requires off course electricity which is a problem in
Nigeria.
7.5: Attracting, Recruiting and Retaining Staff
In terms of recruiting staff, Gal highlights some approaches that can be beneficial to
Nigeria. These include among others, forming ties with local and international universities to
ensure that courses in antitrust law and industrial organization are taught (2010, 426). However,
before realizing the fruits of such ties, other immediate solutions could be realized through
offering and sponsoring internships in more matured agencies and conducting exchange
programs with other competition institutions such as South Africa. More so, the recruitment of
professionals who do not necessarily have economic or law backgrounds, but are trained in the
area of competition analysis and investigation could be a great way to recruit staff (Kovacic and
Eversley 2007, 11). Such activities could help to overcome human resource constraints. To retain
qualified staff, training should be offered on a contractual basis. By so doing training is based on
the condition that the staff works for the agency for a specified period of time which could last
for several years depending on the contract (Kovacic and Eversley 2007, 11). Nonetheless,
retaining staff is often dependent on inter alia, the credibility, transparency and the working
environment of the institution. Hence, the agency will need to build a good reputation. Doing so
will help solve this problem.
42
7.6: Enforcement Cooperation with other Agencies
Competition agencies can benefit by cooperating with other agencies within the region or
internationally. Such cooperation often helps agencies to develop enforcement strategies and
share best practice ideas (Kovacic and Eversley 2007, 11). It also helps to facilitate the
development of staff through staff exchanges which provide competition agents with experiences
that readily exist in the private sector (Kovacic and Eversley 2007, 11). Agency-to- agency
cooperation agreements has proven to be a great way to improve the overall efficacy of a
competition institution. Evidence of this is seen through the numerous agreements such as the
ones signed between the United States and Brazil, South Africa and Zambia, and Argentina and
Brazil (Joekes and Evans 2008, 60). Furthermore, due to the lack of some institutional
endowments, enforcement cooperation can serve as a means to ease such problems, and also
reduce cost. Some example of regional enforcement cooperation includes; the West African
Economic and Monetary Union (WAEMU), Southern and Eastern Africa Competition Forum
(SEACF) and the Caribbean Community regional agreement (CARICOM) (Gal 2010, 431). With
respect to Nigeria, it is preferable that cooperation be strictly limited to tips on enforcement and
best practices which can be adopted. This is to avoid any form of sovereignty infringement on
the country itself, or its goals as regards competition law. Cooperation can be sought from
WAEMU, and other jurisdiction within the continent such as South Africa, Zambia and Namibia
etc that already have existing regimes that have been functioning well overtime. Apart from
regional cooperation, it is important to form ties on competition issues with various international
organization such as the ICN, UNCTAD, etc who can provide investigative techniques and
expertise on competition issues. Such ties will be a source of technical assistance, while helping
to reduce the cost of enforcement.
Part Six: Conclusion
Developing countries have realized the need and advantages of having a competition
regime. Hence, there has been a tremendous increase in the number of developing countries that
have enacted or are in the process of enacting a competition law irrespective of economic
limitations. The rationale for the adoption of competition law is based on economic theory—
however, there are other rationales derived from the experience of other countries such as social
and racial equality as in South Africa or as a development strategy. Economically, there is the
ingrained belief that the existence of competition law improves static and dynamic efficiency of
companies and the welfare of consumers in the economy. Apart from this, competition law is
also necessary in the process of privatization, deregulation and liberalization. In addition, it has
been indicated that the presence of a competition regime could enhance a country’s
attractiveness to FDI, improve the competitiveness of firms internationally, and is necessary to
cultivate a competition culture through competition advocacy. Politically, the introduction of
competition law could be a remedy for corruption among government officials, especially when
dealing with the business sector, government procurement, and bid rigging. Competition law
could also be used to address unhealthy political-private sector relationship. In this regard,
Nigeria has not been able to successfully enact a competition law. This paper presents some of
the reasons why this is the case. We see that one of the main reasons why competition law has
failed to be enacted is that politicians are trying to protect their vested interest thus the lack the
desire to push for the adoption of a competition regime. Hence, there is the need to create
43
sensitization mechanisms in order to spur political leaders and other stakeholders in the country
on the benefits of an effective competition regime as part of the national development goal.
Public opinion is also important in showcasing the benefits of competition law. So, there is the
need for pro-active involvement of the masses in favor of the cause as the outcome is sure to
have a positively impact on the economy, and the livelihood of society at large.
Another major challenge comes as a result of limited resources (human and financial).
The result obtained from this is that the birth of a competition regime in Nigeria has been
hampered due to pressing social needs. Furthermore, there is the notion that developing countries
do not often have the resources to tackle social problems and at the same time handle a
competition regime. Herein the logic rightly assumes that such an endeavor is costly. Therefore,
competition law is not prioritized. Nonetheless, looking at the core of competition policy this
study contends that such a notion is short-sided because even though the short-term benefits are
small, the complete reward of competition policy; such as welfare, enhancement and economic
efficiency are only realized in the long term. After all, many developing countries such as
Zambia who have well functioning competition regime are not free of pressing social needs
when comparing their level of economic development to Nigeria’s. Additionally, developed
countries as well as international organizations, who seek to promote competition offer
numerous technical assistance programs and aid to countries on the verge of enacting a
competition regime, especially its trading partners. Such aid could help to mitigate the limited
resource problem, and could serve as an effective development aid for Nigeria.
Other challenges address the need for Independence/Autonomy. This emphasizes the
importance of the competition agency to be free of any form of political interference when
performing its duties. The independence of the competition agency will curtail jurisdictional
overlap. Moreover, as a virtue, will ensure that regulators and competition authority co-exist
peacefully. This dictates that mandates and legislations are properly defined. Because corruption
is a primary problem in Nigeria, coupled with presumed conflict of interests among agency
officials, a clear definition of independence is imperative. It is important that these challenges are
properly tackled otherwise; they will hamper the effective functioning and the credibility of the
competition agency. Conversely, a different perspective on these challenges mirrors that the
competition law and policy of Nigeria cannot exist by itself, as it has to be interwoven into the
fabric of society. This consists of the economic policies, political climate, and the cultural and
social patterns of the country. The same concept can be ascribed to these challenges as they are
inter-connected, as you cannot address on without the other (hence, a domino effect). As a result,
these challenges should not be seen as an impediment to enacting a competition law in Nigeria.
This study also demonstrates that the adoption of competition law is only the first step,
because Nigeria is likely to encounter numerous challenges in enforcing its competition law post
enactment. Post-enactment challenges as identified in this study include institutional and
administrative arrangements likely to pose problems to efficient market reform such as resource
scarcity, education, jurisdictional overlap, and institutional autonomy. For this reason, the
government and other stakeholders have to aim at developing a competition agency endowed
with the necessary tools and resources to effectively implement the law. This study advice that
Nigeria adopts an integrated model in terms of institutional design, because the integrated model
will help to harness administrative expertise, which is a vital component in building a solid
44
foundation during the agency’s early years. Adopting an integrated model also creates a system
of cooperation, which allows investigators and adjudicators to learn from each other. This helps
to cultivate a culture of learning-by-doing and cooperation through their involvement in both
aspects of enforcement. Adopting this model predicts that institutional and administrative
challenges will be mitigated at least to a workable level.
Furthermore, it is noted that when countries adopt competition law for the first time, they
tend to copy, heavily, from the competition law of developed and more experienced countries
like the United States or countries in Europe. While it is not wrong to study the competition laws
of these countries in order to understand its essence, directly copying them can be disastrous for
Nigeria. This is because there are huge socio-cultural, political, and economic differences.
Consequently, this paper warns that Nigerian officials at the forefront should avoid falling victim
of this copy and paste syndrome. This is important because attention has to be given to issues of
corruption, favoritism, patronage, conflict of interest, and political interference which are often
the norm in Nigeria. This is coupled with the fact that administration of rules and laws may be
absent and where they are present, are often not observed or strictly enforced. These situations
have to be taken into full consideration in all stages of implementation.
Nevertheless, it is necessary to keep the conversation alive regarding the implementation
of a competition law in Nigeria. On this note, the policy suggestion by Dimgba to create a body
within any branch of government to specifically handle competition issues is well suited to the
case of Nigeria. (2008, 31-32). Such a body, will handle issues relating to drafting competition
guidelines, conducting advocacy and sensitization programs, capacity building in the form of
holding as well as attending conferences and also the continuous petitioning of the government
for the introduction of competition courses in law schools and other levels of academia where it
is necessary. Having such a body will buttress efficiency and effectiveness when the law is
finally enacted. This will ensure that further time is not wasted towards Nigeria’s quest to birth a
competition law.
“Strong competition policy is not just a luxury to be enjoyed by rich countries, but a real
necessity for those striving to create democratic market economies”4
4 Dimbga Nnamdi 2008.
45
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