Botswana issues guidelines for competition law fines

Botswana guidelines on fines, published in late January 2013, signal that its Competition Commission means business and will impose serious fines for competition law violations. The guidelines are intended to make the calculation of penalties by the regulator and by parties charged with anticompetitive conduct, more transparent and predictable, but it remains to be seen whether the intended result will be achieved. The Commission must consider the nature, duration, gravity and extent of the contravention; any loss or damage suffered as a result of the conduct (an in particular by consumers); the market circumstances in which the contravention took place; the level of profit derived from the contravention; what amount would serve as an adequate deterrent (to both the guilty firm and other enterprises) whilst remaining proportionate to the infringement; whether the product is an essential good, and whether the firm has previously contravened the Competition Act.

Other factors which may be taken into account include the degree of cooperation with the Competition Authority and whether the firm applied for leniency. Unlike in South Africa, the Botswana Commission will take into account whether a company is actually capable of paying the fine and whether levying too hefty a fine might lead to the enterprise shutting down or becoming insolvent.

The Botswana guidelines set out both aggravating and mitigating circumstances that may result in a higher or lower penalty being imposed. These include the involvement of senior managers and directors in the prohibited conduct; whether an infringement was intentional, rather than negligent; engagement in coercive or retaliatory measures against a leniency applicant or other enterprises to continue with the infringement; continuation of the infringement after the Competition Authority commenced the investigations and acting as a ringleader or instigator of  the infringing conduct.  Circumstances that may result in a lower fine being imposed include that the firm acted under severe duress or pressure; was genuinely uncertain whether the agreement or conduct was prohibited; took adequate steps to ensure compliance with the Botswana Competition Act and terminated the infringement as soon as the Competition Authority intervened. A balance needs to be struck between the need to deter anti-competitive conduct against the rights of companies to receive a fair and proportionate penalty.

In practice, the Botswana Commission is likely to consider all of the factors which must be taken into account and then to take any aggravating and mitigating circumstances into account.   These factors are very similar to the factors contained in South Africa’s Competition Act and the approach adopted by the South African competition authorities when determining appropriate penalties.

As in South Africa, Botswana’s Competition Act caps an administrative penalty at ten percent of the guilty firm’s turnover. In South Africa, a penalty can only be imposed on a firm’s turnover generated in one year. However in Botswana, the Commission is empowered to fine a guilty firm based on its turnover generated over the entire period that it was engaged in the prohibited practice, up to a maximum of three years.

The Botswana Commission clearly means business. Although it has not imposed any penalties for anti-competitive conduct to date, any business trading in or into Botswana must take steps to comply with Botswana’s Competition Act, to avoid potentially significant penalties.

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