The Covid-19 pandemic has affected economies globally and left many reeling from the aftermath of this economic storm. What was once the usual going of businesses has become a strained environment where the various participants of the economy do not have the same footing and thus, the opportunities might seem to be unfairly distributed.
What is the importance of Competition Law in an economy?
It is important for any thriving economy to have balanced competition where productivity and international competitiveness is strengthened and dynamic markets and economic growth is promoted.
Businesses are mainly concerned in the percentage of market control that they possess. Hence, the major investments in marketing and intellectual property actions to either increase or maintain their market share. In other words, one of the goals of any business is to ensure maximum control over the market to guarantee its survival. For instance, when there is only one business supplying a product or service in a market, consumers do not have any other option to choose from. Thus, this business can set high prices or provide lower quality products and thereby, maximise its profit. If there had been other competitors in the same market, this business would have to maintain prices at competitive levels and ensure their products are of superior quality.
As a result, “competition is good for consumers for the simple reason that it compels producers to offer better deals – lower prices, better quality, new products, and more choice” and this is why there is always the need to control the competition in the different sectors.
Several countries have their Competition legislation to ensure that there is no anti-competitive practices within its economic sectors and that no mergers or other forms of business arrangements will cause any prejudice to the consumers.
In Mauritius, the Competition Act 2007 aims at regulating and promoting competition on the market. In fact, businesses should view each other as rivals and compete. This would benefit the consumers as it would lead to low prices, good quality products or services, and a variety of choices. The Competition Act 2007 acts as a safeguard against all forms of anticompetitive practices that would be detrimental to the consumers and disadvantageous for the economy by the disturbance it would cause on the market’s demand and supply forces.
What is the role of the Competition Commission in Mauritius?
In Mauritius, the Competition Commission (‘the Commission’) was established in 2009 to enforce the provisions of the Competition Act 2007 in order to ensure that there is no abusive dominance, restrictive agreements and anticompetitive mergers.
The Commission is a parastatal body which falls under the aegis of the Ministry of Commerce and Consumer Protection. It should be highlighted that the Commission is independent from the Government. The Executive Director – a post currently occupied by Mr. Deshmuk Kowlessur – is independent in his decision making on what and how to investigate. It should be noted that the Executive Director will not act as a commissioner. The decisions are then taken by five Commissioners headed by a Chairman.
The focus of the Commission is to ensure sound competition within the Mauritian economy to prohibit business practices that could either reduce or eliminate competition. Given the enforcement, investigative and advisory powers of the Commission, it can compel businesses to disclose information. Should a business’s conduct be found as anticompetitive, the Commission can intervene and correct the situation. There are several corrective measures namely, the issuance of orders and directions, imposition of financial remedies and sanctions and imposition of charges and fees and so on.”
On 8th June 2021, there was a Media Release presenting the Commission’s report following its investigation on the conditions of competition in the pharmaceutical sector. According to the Executive Director of the Commission, Mr. Deshmuk Kowlessur, “this market study is part of the ongoing efforts of the Competition Commission… and provides a basis to evaluate regulatory reforms in terms of pricing mechanism and import regime in relation to supply of pharmaceutical products in Mauritius.”
However, after more than a decade of existence, the Commission’s usual process needs to undergo some changes in light of the ‘New Normal’ as a consequence of the pandemic.
How has the Covid-19 pandemic challenged the implementation of Competition Laws?
The Covid-19 pandemic has taken the world by surprise when governments were forced to go on ‘lockdown’ to combat the spread of the virus. The measures taken have impacted and shifted the world’s economy. In the pandemic’s wake are economic losses, sudden closures of businesses and governments struggling to come up with innovative solutions to adapt to the ‘New Normal’.
This global health crisis has highlighted the importance of an effective collaboration between the various market participants of the economy. With the ‘New Normal’ and the unrelenting presence of the Covid-19, different angles and strategies have to be considered in order to tackle the new emerging risks and opportunities and to ensure economic recovery.
In times of crisis, people are more risk-averse and less likely to seek differing opinions and expertise. With the main preoccupation being survival, the market participants would usually fall back on previous actions and solutions with no consideration to the potential consequences. However, this focused approach does not factor in new strategies and this could lead to the downfall of many businesses.
History has shown that the sole focus on survival denies the support and protection that a collaboration might offer. As such, it is primordial for businesses to collaborate or even form trade associations as they face the current pandemic. These businesses will then be able to communicate with one another on the best practices and will collectively find solutions for the mutual problems related to the pandemic. Furthermore, coordination is key as a response to issues such as shortages and disruptions in the demand and supply chain of essential products and services.
It should be highlighted that collaboration and trade associations between competitors can be dangerous for the vested interests of the involved stakeholders. Such agreements might be very detrimental to the consumers’ interests. There is the imminent risk that unregulated competitors would form cartels and engage in anti-competitive conduct; this being the same risk that the antitrust and competition laws seek to mitigate.
The current challenge of the Competition authorities worldwide is to help competitors implement collaboration and provide the appropriate guidelines on the proper way to adapt to the changing circumstances in line with the Covid-19 pandemic.
How did the Commission tackle the Covid-19 situation?
The Commission recognised early on the importance of adapting to the new circumstances arising from the Covid-19 situation. In a communique in April 2020, they stated that the Competition law enforcement would not constrain cooperation which is necessary and critical in the consumers’ and public’s interest.
In order to effectively tackle the crisis brought by the pandemic, the Commission has published guidelines and recommendations in collaboration and trade associations. Those guidelines propose a framework within which businesses may collaborate or form associations without being in breach of competition policies. It is crucial that long term damages are not done on the market. As such, though certain competition laws are ‘relaxed’, caution should be taken so that in the medium to long run, effective competition is restored. Last year, the Executive Director was giving informal and non-binding advice as part of a guidance programme on whether the collaboration that certain businesses intended to engage in were in contradiction with current competition legislations.
Despite acknowledging the necessity for collaboration between competitors, the Commission mentioned the risk that the current crisis becomes an opportunity for businesses to exploit consumers. They explained that whilst the goal of the Commission is not to protect competitors, they “cannot allow stronger players to abuse their position to foreclose weaker players.”
