2019 was a hectic year for Corporate Commercial law. The year started with plenty of buzz in corporate commercial law. It ended with mixed feelings. The anticipated Companies and Allied Matters Bill was not passed into law. However, we got the Federal Competition and Consumer Protection Act, and this was a welcome development to the legal world. The Federal Competition and Consumer Protection Act (FCCPA) was enacted by the National Assembly in December 2018 and subsequently signed into law by President Muhammadu Buhari in January 2019.
The enactment of a codified set of competition is a long-anticipated change. Before the enactment of this Act, there was no all-embracing competition or anti-trust law in force in Nigeria. The Act repeals the Consumer Protection Council Act, Cap. C25, Laws of the Federation of Nigeria, 2004, and Sections 118, 119, 120, 121, 122, 123, 124, 126, 127 and 128 of the Investments and Securities Act, Cap, 124, Laws of the Federation of Nigeria, 2004. It is important to note that the Consumer Protection Council (CPC) has transitioned into the Federal Competition and Consumer Protection Commission (FCCPC).
The Act also establishes the Federal Competition and Consumer Protection Tribunal, which is granted authority to adjudicate over all matters which arise from the operation of the Act. The Tribunal has powers to hear appeals from, or review any decision from the exercise of the powers of any sector-specific regulatory authority in a regulated industry in respect of competition and consumer protection matters. The Tribunal also imposes administrative penalties for breaches of the Act. The Tribunal also oversees forced divestments, partial or total, of investors from companies.
The FCCPA prohibits and voids all restrictive agreements between business entities. The description of restrictive arrangements under the Act is any arrangement which is likely to prevent, restrict or distort trade. The definition is extensive and includes the prohibition of minimum resale prices (even for patented goods), direct or indirect price-fixing, collusive tendering, withholding supply of goods and services from a dealer, exclusionary contractual provisions, etc. The specific implication of the establishment of the Tribunal is that it can hear appeals from the exercise of powers by any sector-specific regulatory authority in a regulated industry in respect of competition and consumer protection matters.
The Act contains provisions prohibiting stakeholders from making or entering into agreements which have the effect of halting, limiting, impeding or manipulating competition in a market. It provides that any such agreement would be void and of no legal effect. The Act prohibits any agreement or condition contained in an agreement that purports to establish minimum prices to be charged on the resale of goods and services in Nigeria. The Act, however, distinguishes fixing of minimum prices from the recommendation of prices; the latter is permitted prohibited. The Act vests the President with the power to declare that the prices for certain goods and services shall be controlled by the Act.
This Order is to have a date on which it ceases to be in force. The Act provides that when this Order is made, and the regulated prices for goods and services are released, goods and services shall not be supplied at any other price. The punishment for a person (and/or director) violating the Order is a fine not exceeding N50,000,000 (Fifty Million Naira) and for a body corporate, a fine not exceeding 10% of its turnover in the previous year. Part XII of the Act regulates mergers. Under the Act, proposed mergers shall not be implemented unless the Commission is first notified. The Commission must then give approval to the merger. Furthermore, under the Act, a party to a ‘small merger’ may implement that merger without approval from the Commission.
The Act also regulates the marketing of goods and services, protects the consumer from false advertising, protects consumers’ rights to examine and return goods, etc. The Act provides for the duties of a manufacturer, importer or distributor of goods to label goods properly, duty to withdraw hazardous goods from the market, and liability for defective goods. So the Act goes a long way to helping to protect consumers and combatting monopolies. It is a step in the right direction, and one can foresee a decade of businesses being kept on their toes by consumers and the regulators. The question of whether the Act can handle Anti-Trusts is going to be one that will be asked until we see a credible test.
The year in review was also an important year as it brought to fore a new era in labour law. The National Minimum Wage Act of 2019 established an updated minimum wage of NGN 30,000. This will evidently go a long way if inflation does not keep rising at an accelerated rate. There are concerns about whether the Government can afford to pay the new minimum wage. That is likely to be a contentious issue in 2020. Another critical issue is the creation of the Code of Corporate Governance 2019 by the Financial Reporting Council of Nigeria. The Code has been lauded as a step in the right direction to improve stakeholders’ confidence. However, it must be noted that there is a need for more sector-specific regulation to improve corporate governance. It is hoped that there will be more significant strides in Corporate and Commercial law in the following year and the next decade. It is hoped that 2020 and the new decade will bring more Changes in Nigerian Corporate Commercial law.
