2017 END OF YEAR MEDIA BRIEFING BY EXECUTIVE DIRECTOR OF CCPC MR. CHILUFYA SAMPA

2017-12-15

REMARKS BY EXECUTIVE DIRECTOR OF THE COMPETITION & CONSUMER PROTECTION COMMISSION (CCPC) MR. CHILUFYA SAMPA DURING THE 2017 END OF YEAR MEDIA BRIEFING HELD ON TUESDAY, 6TH FEBRUARY, 2018, AT CCPC HEAD OFFICE IN LUSAKA. The CCPC directors, CCPC managers and other staff present here, our invited colleagues from the media, ladies and gentlemen, good morning to all of you. I warmly welcome you all to this media briefing that will highlight activities of the competition and consumer protection commission in 2017. The year 2017 was a busy year for the commission which saw an increase in the volume of cases related to anticompetitive business practices and infringements on consumer rights. The commission recognises the crucial role you the media play in faciliting a platform on which we can educate and disseminate information to all our stakeholders. So we thank you for this continued partnership in keeping the public informed on the milestones achieved by the commission in realising its mandate. My brief today, will give an overview of our activities over the past year across the commissions key mandate functions: First, as a competition regulator, which entails preventing agreements which substantially lessen competition, these can be restrictive business practices including cartels and abuse of market power and anti-competitive mergers. Second, as a consumer regulator, which means making sure that consumers rights are protected against unfair trading conduct. This is enforced through inspections and awareness programs. I will start with mergers and monopolies; 1. Mergers and monopolies Ladies and gentlemen, In the year under review, the directorate of mergers and monopolies received eighty two (82) merger notifications against the set target for the year of fourty (40). This represents a 60% increase in merger notifications compared to the previous year 2016. Out of the eighty two (82) notifications received, sixty five (65) merger reviews were closed, which represents a 33% increase on 2016 merger cases closed. This indicates a 79% effeciency rate on the closed cases. Of the 65 cases closed,the services sector received the highest number of merger reviews with thirteen (13) recorded in 2017, while, banking and finance recorded eleven (11), real estate sector eleven (11), agriculture nine (9), manufacturing eight (8), tourism four (4), mining four (4), energy 3, and ict two (2). The approximate value in pledged merger investments handled in 2017 was USD 6,000,000 million with about 4,430 Direct and indirect jobs created and 411 more maintained through the transactions. The commission fined eight (8) enterprises for implementing mergers without authorisation, with the remaining seven (7) cases still under assessment. The commission will in 2018 continue contributing to zambia’s foreign direct investment and ease of doing business by the facilitation of merger transactions. 2. Abuse of dominant position of market power With regards to abuse of dominance cases, the commission received six (6) cases in 2017 while there were seven (7) cases that were brought forward from 2016; hence we had a total of thirteen (13) cases. The Commission closed seven (7) cases which included cases on Zambia sugar plc, MTN Zambia, Lafarge cement plc, Zambia postal services corporation (Zampost) and Parmalat. The cases adjudicated on have led to guilty determinations of anti-competitive behaviour and exploitation of consumers with fines being imposed relating to discriminatory pricing, unfair pricing and exclusionary conduct. The manufacturing sector has continued to dominate in abuse of dominance cases contributing over 50% of cases reviewed by the commission in 2017. 3. Restrictive business practices (rbps) The year 2017 saw an increase in the number of restrictive business practices (rbp) cases handled. The commission received and investigated a total of thirty seven (37) cases of which the commission managed to close eighteen (18) of the cases reported. The cases received were from various sectors, among them agriculture, wholesale and retail trade, information communications technology, banking and finance, aviation, real estate,livestock, manufacturing and services. The service sector received the highest number of cases at twenty four (24) followed by the wholesale/retail trade sector recording five (5). 4. Cartels In terms of cartels, the commission handled a total number of seven (7) cases in the services, agriculture and livestock sectors. The commission in 2017 concluded its investigations into a cartel case that involved price fixing by six (6) bakeries on the copperbelt province. The commission was concerned that some bakeries on the copperbelt had simultaneously adjusted bread prices around the same time and within the same parameters. All of them increased the price of bread and other confectioneries by as much as twenty three percent (23%). This anti-competitive practice affected the poorest of the poor on the Copperbelt because this price adjustment was a significant amount when compared to their income considering that bread is a daily staple food for most people in Zambia. Ladies and gentlemen, It is very disheartening to note that in this challenging economic environment, businesses could take advantage of consumers in general and the poor in particular to deprive them of the hard earned income. The board of commissioners directed that the bakeries be fined collectively two million kwacha (K2, 000,000) for price fixing of bread in 2015. The bakeries have since begun paying of their respective fines. The directorate in the year under review also coordinated the development of a Case Management System (CMS) which would assist officers easily manage and track their investigations as well as aid in organizing the cases by easily documenting facts and evidence. It is also envisaged that the case management system will help create efficiencies with handling of investigations and provide the commission with an effective means of retrieving and analysing information on old cases which would enable investigators to cross-reference their case details for possible “links” to other investigations. The development of the Case Management System is being developed in conjunction with smart Zambia. 5. Consumer protection Ladies and gentlemen, Year on year, Zambia continues to see growth in business activities especially in the service and retail sectors, which has made the strong enforcement of consumer protection laws important by taking action in cases where there is significant infringement on consumer rights. The commission in 2017 received and resolved a total of 1,868 cases and successfully recovered one million eight hundred and nine thousand five hundred and seventy four kwacha (k1, 809,574.) In product refunds and replacements. The increase in the consumer complaints and the subsequent recoveries through refunds and replacements were as a result of massive awareness programs which the commission conducts countrywide on consumer rights and obligations, in accordance with the act. The retail trade had the most complaints of 832 cases primarily driven by cases of defective` goods especially electrical and electronic products followed by the insurance sector with 261 cases. Other notable complaints were from the transport and banking sectors with a total of 131 and 72 cases respectively. Complaints were mainly on poor service delivery such as unsolicited transport services and misrepresentation in loan agreements and failure to supply services within a reasonable time. Arising from this, the commission developed brochures to do with financial services and defective products to enhance consumer awareness of their rights and deter traders from unfair trading practices against consumers. 6. Inspections In 2017, the commission conducted inspections of trading premises in over 78 districts in conjunction with various local councils and ministry of health inspectors across the country. During these inspections, goods worth one hundred and seventy six thousand three hundred and twenty three kwacha (k176, 323.) Were confiscated and destroyed in various parts of the country. The commission observed that through such inspections, unsuspecting consumers were protected from buying and consuming unsuitable products as traders ensured that they met the requirements of the law. In addition, the commission appointed inspectors carried out inspections in 32 districts and four hundred and fifty six thousand three hundred and ninety four kwacha (k456, 394.00) worth of goods were seized and destroyed. The commission during this period appointed 18 additional inspectors from 18 districts, bringing the total of inspectors to 127 nation-wide. Inspectors continue to serve the commission well in their respective stations. 6. Advocacy Ladies and gentlemen The commission also embarked on a number of different strategies all aimed at indoctrinating a culture of competition and consumer awareness amongst businesses/ consumers in the country. The commission in 2017, held ten (10) stakeholder sensitization workshops in all ten provinces to promote compliance with the act. This strategy has resulted in enterprises having fast track resolution of complaints even before they are reported to the commission. The commission also continued with the successful promotion of school clubs through a wide range of interactive activities like essays, quizzes, debates and workshops on competition and consumer protection. Currently the commission has rolled out to 273 school clubs across the country. Ladies and gentlemen, In the year under review, the commission observed that most people in the rural parts of the country have continued to be exploited by some unscrupulous traders due to little access to consumer education. To mitigate this concern, the commission conducted six (6) provincial sensitization and advocacy tours in central, eastern, northern, north-western, Luapula and Lusaka provinces where a number of activities were conducted such as inspections of trading premises, drama performances, sensitization talks in schools/colleges, talks with traditional leaders and their subjects in chiefdoms and villages, markets sensitization, television and radio programmes all aimed at educating both traders and consumers. The commission reached out to various stakeholders in the provinces using local languages so as to bridge the language gap in the villages. As at December 2017, the commission had visited 63 districts in the aforementioned provinces. Ladies and gentlemen, In enforcing the competition and consumer protection act, the commission continues to work with a number of like-mined institutions such as the local authorities, the Zambia bureau of standards, Zambia metrology agency, Zambia Compulsory standards board, Zambia police (ZP), and Civil Society Organizations (CSO) such as the consumer unity and trust society (cuts) in ensuring that consumers are protected. The commission in the year under review also re-energized three (3) joint working groups (JWG) with bank of Zambia (BOZ), Zambia information and communications technology authority (Zicta) and pensions and insurance authority (pia). This is in an effort to have a collaborative approach in addressing consumer complaints. As I conclude, ladies and gentlemen, allow me to assure the nation that the commission will continue to be vigilant and execute its mandate in accordance with the law. It will not hesitate to punish all enterprises that abrogate any provision in the competition and consumer protection act or any condition it puts in place in order to safeguard competition and consumer welfare in any sector of the economy. We remain grateful to members of the public, all stakeholders, the board of commissioners, the government and cooperating partners for the confidence that they continue to hold in the commission. I thank you all for your attention, and May god richly bless you.

Namukolo Kasumpa

CCPC Public Relations Officer