Cross-border regulation of market competition under AfCFTA critical – UNCTAD

Cross-border regulation of market competition under AfCFTA critical – UNCTAD says

The United Nations Conference on Trade and Development (UNCTAD) has said the regulation of cross-border market competition among businesses under the African Continental Free Trade Agreement (AfCFTA) is critical and extremely necessary.

According to UNCTAD, it experts the Competition Protocol policy currently being developed by member countries in the AfCFTA Phase II negotiations to effectively deal with cross-border cartels in the region, given the evidence of the existence of cross-border cartels on the continent.

UNCTAD is of the view that domestic cartels are likely to spread to other African countries as borders are opened and free movement of people, goods and services become a reality under the AfCFTA.

In a research paper on the implementation of the AfCFTA, UNCTAD asserts that competition among businesses on the continent if not regulated will result in anti-competitive practices as businesses seek to maximize profits under the trade pact.

Adding that both domestic and foreign businesses especially, can abuse their dominant position with the abuses taking the form of predatory behaviour resulting in eliminating local competition, price-fixing cartels or other market sharing agreements which reduce choice, increase prices, and thus deny consumers and other excluded producers the benefits of trade liberalization.

“If competition is not regulated, when businesses are seeking to maximize profits, anti-competitive practices may emerge, including cartels, vertical restraints, and
abuse of dominance. Firms could fall into anti-competitive engagements in the course of consummating mergers and acquisitions. Anti-competitive practices as
well reduce consumer choice and increase prices. This denies consumers and excluded producers the benefits of trade liberalization.”

“But if well-formulated and implemented, the AfCFTA Protocol on Competition is an effective tool to deal with cross-border anti-competitive practices in Africa. The
continental approach to competition policy presents an avenue for African markets to grow and be competitive both inside and with foreign competitors,” 
stated UNCTAD.

UNCTAD, in view of the potential anti-competitive practices of businesses under the AfCFTA, has also urged the continent to develop consumer protection laws.

“In addition to competition law and policy which is provided through the AfCFTA Competition Protocol, consumer protection cannot be ignored. Consumer protection is a complementary policy to competition policy. The need to have consumer protection provisions within the AfCFTA protocol cannot be overemphasized.

“One consumer protection area that the AfCFTA needs to examine, which is still a major challenge, is the practice of sustainable consumption. Environmental issues
are on the green economy agenda, SDG 12 on sustainable consumption and production, and the sustainable consumption in the United Nations Guidelines for Consumer Protection (Guideline 49-62), placing sustainability in an important position in consumer protection.

African policymakers need to create a link between consumer polices that promote sustainability and consumers’ responsibility in promoting a clean environment. For example, the problem of non-degradable plastic material is a considerable environmental issue in many African countries arising from imported materials from other parts of the world,” stated UNCTAD.

Consumer protection provides information and rights awareness to consumers, enforces rules against unfair and misleading commercial practices, promotes product safety and integrates consumers’ interests across all economic sectors. It aims to balance the existing asymmetry between traders and consumers.