IP and the Competition and Consumer Protection Act 2019 (Nigeria)

Nigeria has recently adopted a substantive competition statute – the Federal Competition and Consumer Protection Act 2019 (the Act). The President of the Federal Republic of Nigeria signed the Federal Competition and Consumer Protection Bill 2018 into law. A copy of the Bill is available here.

Kat Kompetition

The Act represents success in efforts over the years to have a substantive statute for the promotion and protection of competition in the Nigerian economy. Since 2002, there have been several attempts to introduce a substantive competition law regime in Nigeria to no avail.

The Act repeals the Consumer Protection Council Act, to establish the Federal Competition and Consumer Protection Commission (“Competition Commission”) and the Competition and Consumer Protection Tribunal (the “Tribunal”). It also repeals sections 118-120, 121 (excluding S. 121(i) (d)), 122-128 of the Investments and Securities Act, effectively stripping the Securities and Exchange Commission (SEC) of its power to approve mergers. These statutes and a patchwork of federal statutes and regulations made by regulatory agencies in charge of specific sectors had previously provided statutory competition protection in Nigeria. These include: the Competition Practices Regulations, 2007 made by the Nigerian Communication Commission; rules made by agencies such as Standards Organisation of Nigeria, the National Agency for Food, Drugs Administration and Control etc.

IP-facing highlights of the new Federal Competition and Consumer Protection Act
The Act applies across all markets and all commercial activities within Nigeria and to Nigerian firms and firms doing business within Nigeria. See section 2. Given technological advancements and increased significance of IP-protected products in global and domestic business relations, the Act contains provisions that may not only complement existing IP legal framework but may also protect competition in IP-related markets.

Here are the highlights of the Act as it relates to IP:

• The Act establishes the Competition Commission to administer and enforce of the provisions of the Act and carry out a wide range of functions [26 specified functions] as stated in section 17(a) – (z). These functions include: prohibition of restrictive agreements or conduct it considers anti-competitive; determination of market power and market dominance of a business; determination and elimination of monopolies; and merger/business combination controls. The Commission has powers to make regulations relating to the charging and collection of fines, levies and imposition of administrative penalties (section 18). If properly exercised, these functions and powers can contribute to the ease of doing business in Nigeria by providing a transparent regulatory landscape for businesses, including IP-based ones, to operate.
  

• The Act also establishes the Tribunal to adjudicate over conduct prohibited under the Act. See section 39. The Tribunal also has appellate jurisdiction to review the decisions of the Competition Commission and decisions of sector regulatory authorities in respect of competition and consumer protection matters. See sections 47(1) and 103. Consequently, the Tribunal may now review decisions of IP sector regulators such as the Nigerian Copyright Commission (NCC) on matters of competition and consumer protection such as tariffs imposed by collective management organisations (CMOs). Given that CMOs usually occupy a monopoly position in the market for copyright-protected content, the Tribunal can help to ensure that such position is not abused against the interests of authors and users.
  

• The Act provides a relatively wide variety of horizontal and vertical agreements that are unlawful and prohibited. In particular, it prohibits and declares null and void, price cartels, price-fixing, collusive tendering, minimum resale-price maintenance etc. Section 59. These prohibited agreements are agreements that may be deployed by right-holders or against right-holders to the detriment of the market for IP-protected products.
  

• Section 72(1) of the Act provides for the prohibition against abuse of dominant position. Section 72(2) appears to provide a closed list of conduct that amount to abuse of dominant position. These include: excessive pricing, refusal of access to an essential facility, exclusionary conduct such as refusal to supply, margin squeeze, buying up scarce supply of intermediate goods or resources required by a competitor etc. The closed list of conduct that amount to abuse of dominant position appears to exclude the possibility of recognising abuses not mentioned in the list. This may be problematic as certain conduct relating to the exercise or use of IP rights may restrict competition but may not be captured by the list. A more pragmatic provision would have been a non-exhaustive list and one, which admits the possibility of recognising abuses not mentioned in the statute. A good example is found in Art 102 of the Treaty on the Functioning of the European Union (TFEU), which prohibits “any abuse” by a dominant firm and contains a non-exhaustive list of conducts considered abusive. See British Airways v Commission.

• The Competition Commission has concurrent jurisdiction in matters of competition and consumer protection with the regulatory authorities in charge of other sectors. However, the Competition Commission will have precedence over such sector regulator. Section 105(2). It is opined that sector‐specific regulators and adjudicatory bodies are better equipped to understand the particularities of their specific sectors and to provide ex ante control, while competition law agencies only act ex post. The better sector‐specific regulation works, the fewer complaints competition agencies will receive, and the less they will have to intervene – a better regulatory environment for firms to operate. This is particularly so for IP-based sectors that usually requires specialist knowledge.
  

The Act can certainly play a proactive role in promoting competition and consumer welfare in the market for IP-protected products and services, and may play a restrictive role in dissuading the anti-competitive exercise of IP rights. However, it remains to be seen how the Act will be applied and/or enforced. As they say, the taste of the pudding is in the eating. In this case, the taste of the Act is in the application and/or enforcement!