A Review Of The Federal Competition And Consumer Protection Act 2019

 

INTRODUCTION

On the 5th of February 2019, President Muhammadu Buhari assented to the Federal Competition and Consumer Protection Act (“FCCPA” or “The Act”).[1] The FCCPA repeals the Consumer Protection Council Act (the “CPC Act”), Cap C25, LFN, 2004 and sections 118 -128 of the Investment and Securities Act, CapI24 Laws of the Federation of Nigeria, 2004.[2] The Act establishes the Federal Competition and Consumer Protection Commission (the “Commission”), which is responsible for the administration and enforcement of the provisions of the Act. It also establishes the Competition and Consumer Protection tribunal to adjudicate over conducts prohibited by the Act and disputes that arise from the provisions of the Act.[3] This Tribunal has jurisdiction throughout the Federation.  The Act through the establishment of the Commission and Tribunal seeks to promote competition in Nigerian markets at all levels, by eliminating monopolies, prohibiting the abuse of a dominant market position and penalizing other restrictive trade and business practices. [4] This means that the Commission is focused on prohibiting commercial agreements or practices that restrict free trading and competition between businesses and ensuring that goods and services made available in the Nigerian market are of a certain standard and quality similar to international best practices.

The FCCPA applies to all undertakings and all commercial activities within, or having effect within, Nigeria; it also applies to corporate bodies and agencies of the Government that engage in commercial activities, corporate bodies engaged in economic activities in which the Government has a controlling interest and all commercial activities aimed at making profit and geared towards the satisfaction of demand from the public. [5] It should be noted that the Act is not restricted to acts or conducts within Nigeria alone but shall also apply to conduct outside Nigeria. [6]

COMPARISON BETWEEN THE FEDERAL COMPETITION AND CONSUMER PROTECTION ACT AND THE CONSUMER PROTECTION COUNCIL ACT 

Functions and Powers of the Commission

A comparison of FCCPA and the repealed CPC Act reveals several significant changes to the legal framework for competition and consumer protection in Nigeria. The new law makes ample provision against the creation of monopolies and anti-competition practices. It sets out in detail, the rights of consumers and the available modes of redress where these rights are infringed upon.[7] The CPC Act included provisions to protect the consumer against exploitation by business owners, harmful business practices of manufacturers, under the CPC Act the focus was more on the elimination of hazardous products from the market, while the FCCPA aims at promoting efficiency in the emerging Nigerian economy by eliminating barriers and operational obstacles in the form of abuse of dominant power as well as unconscionable marketing, trading and harmful business practices of manufacturers, wholesalers, retailers etc.

The establishment of the Commission and the Tribunal has provided the much needed regulatory and legal framework for competition and consumer protection within the Nigerian economy. The functions and powers of the Commission underx the FCCPA, are more robust than the powers of the Council under the repealed CPC Act.

The Commission of its own has the power to prevent the circulation of goods and services which constitute a public hazard or an imminent hazard, [8] unlike the CPC Act which only gave the Consumer Protection Council (“Council”), the power to apply to court to prevent the circulation of such goods and services. Under the FCCPA, the Commission can act independently of the Court system and is not subject to the discretion and procedures of the court.  

 It has the power to make rules and regulations regarding competition in the market and protection of consumers. The Commission can of its own prohibit the making or performing of an agreement or arrangement to which the Act relates, declare any business practice as abuse of dominant position of market power and prohibit the same, after carrying out the necessary investigation. [9] The Act also makes detailed provisions for where there is an abuse of a dominant position in the market by an undertaking or an association of undertakings, where an agreement is restrictive, and where a monopoly situation exists, so as to guide the Commission in the exercise of its powers.

For the purpose of regulating and facilitating competition, the Act also gives the President the power to publish an order in the Federal Gazette, declaring that the prices for goods or services specified in that order be controlled according to the provisions of the Act.[10] Therefore, in a situation where competition is limited in a particular market, the President, upon a submission of a report by the Commission, has the power to make a declaration that certain goods and services should be provided to consumers at an authorized price.

The power to prohibit or approve mergers now rests with the Commission and no longer the Securities and Exchange Commission.[11] The focus of the Commission when considering a merger or a proposed merger is on the competition and anti-trust implications of such a merger. This is further evidence that proactive steps are being taken to create a more competitive Nigerian market.

ENFORCEMENT AND PENALTIES UNDER THE ACT

The Commission also has the power to summon and examine witnesses, administer oaths, require that any document submitted to it be verified by affidavit.[12] Likewise, the tribunal can conduct proceedings in its own right and the decisions of the tribunals are binding and enforceable. The fines and penalties under the FCCPA are more stringent. A person who is uncooperative and willfully obstructs or interrupts the procedure of the Commission, is liable on conviction of  imprisonment for a term not exceeding three years or a fine not exceeding N20,000,000.00 (twenty Million Naira)[13].  The Commission is therefore capable of dispensing severe punishment where there is non-compliance and developing a respect for the authority of the Commission among businesses and persons engaged in commercial activities. The stringent penalties will most likely cause businesses and undertakings to comply with the rules and regulations of the Act.

LIMITATIONS OF THE ACT

The Act has many advantages but is not without limitation in some aspects. For instance, some of the powers of the Commission seem to extend beyond the purview of the Act and may encroach on the powers of other Agencies, Regulators and bodies. For example, section 17(b) gives the Commission the power to make rules and regulations under the FCCPA as well as any other enactment. [14] This could be inferred to mean that, the Commission has the power to make rules and regulations under other related policies or laws which could interfere with the bodies or agencies set up to administer such laws. While section 104 gives the FCCPA supremacy over all other provisions of any other law in all matters relating to competition and consumer protection, this has the tendency to create an overlap and an interference with the roles and functions of other institutions and agencies. The Act gives the Commission the power to cause quality tests to be conducted on consumer goods as it deems necessary, it also has the power to compel manufactures, suppliers, dealers, importers, wholesalers, retailers etc. to certify that all standards are met in their goods and services and give public notice of any health hazards associated with their goods and services.[15] These powers are similar to the powers accorded to the Standards Organization of Nigeria (SON) and National Agency for Food and Drug Administration and Control (NAFDAC) and as a result, an overlap of function and authority. The provisions of the Act in Section 63 and 64 also apply to patented products in Nigeria, thereby causing an overlap between the functions of the Trademarks, Patent and Design Registry of the Federal Ministry of Industry, Trade and Investment and the Commission.[16]

It is important for Commission to work in concert with other agencies which have similar functions and power, so that the desired effect of enhancing competition and protecting consumer’s interests can be achieved.

Furthermore, Section 3 (2) of the FCCPA states that the Commission shall be an independent body; however the appointment of the Chairman and the Board of Commission is done by the President, subject to confirmation by the Senate. [17] The President also has the power to renew the term of each commissioner[18], and the power to suspend or remove a commissioner where he contravenes the provisions of Section 8 of the Act. The funding of the Commission and the Tribunal also comes from the budgetary allocation and the government of the Federation. There is therefore the tendency for the Commission to be indirectly influenced in carrying out its functions and powers. 

In order to induce credibility and a stable enforcement of competition rules, the use of Search Committees made up of industry stakeholders with the requisite technical expertise to make informed selections would be preferred.[19] Also, rather than depending solely on budgetary allocation, perhaps a better way of funding the FCCPA, would have been through a combination of different sources such as a mix of general revenues, fees or fines. This way, it is more difficult for any single source of funding to dominate the budget and influence the Commission’s activities.[20]

 

CONCLUSION

The purpose of the Federal Competition and Consumer Protection Act 2019 is to develop, promote and regulate a fair and competitive market in the Nigerian economy and protect the interest and welfare of consumers by ensuring that goods and services in the Nigerian market are of a high standard. The provisions of the Act give the Commission sufficient authority to oversee and regulate the Nigerian market in a manner that ensures the elimination of hazardous goods and services, anti-competitive agreements, misleading and unfair trading and business practices, but this can only be achieved with a proper understanding and enforcement of these provisions. The Federal Competition and Consumer Protection Act 2019, is a welcome legislation that is robust enough to achieve its objectives and open up the Nigerian market to small and medium scale businesses by removing monopolies and market dominance by one business, alongside protecting Nigerian consumers and their rights.

 
[1] SEC NIGERIA CIRCULAR. 8 February 2019. Notice on the Passage of the Federal Competition and Consumer Protection Act. Retrieved from <http://sec.gov.ng/notice-on-the-passage-of-the-federal-competition-and-c...
[2] Section 165 FCCPA 2019
[3] Section 39(2) FCCPA 2019
[4] Explanatory memorandum of the Federal Competition and Consumer Protection Act, 2018
[5] Section 2(2) FCCPA 2019
[6] Section 2(3) FCCPA 2019
[7] Section 114 FCCPA 2019
[8] Section 18(1)(b)FCCPA 2019
[9] Section 18(3)FCCPA 2019
[10] Section 88 FCCPA 2019
[11] Section 17(k); 92 FCCPA 2019
[12] Section 18(4) FCCPA 2019
[13] Section 33 FCCPA
[14] Section 17(b) FCCPA 2018
[15] Section 18(1)(d)
[16] Section 63 & 64 FCCPA 2019
[17] Section 5(1) FCCPA 2019
[18] Section 5(3) FCCPA 2019
[19] S.V. Berg, A.N. Memon and R. Skelton, ‘Designing an Independent Regulatory Commission’ (2000) <http://regulationbodyofknowledge.org/wp-content/uploads/2013/03/Berg_Designing_an_Independent.pdf>
 

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