Competition and Fair Trading Commission (CFTC) Mandate Enhanced by New Legislation

The Competition and Fair Trading Commission (CFTC) of Malawi, established under the Competition and Fair Trading Act (CFTA) of 2024, is the primary regulatory body overseeing competition and consumer protection in the country. The recently enacted CFTA 2024, which replaced the 1998 Act, significantly strengthens the CFTC's mandate and enforcement capabilities. Key reforms include the introduction of mandatory merger notification thresholds, enhanced powers to impose administrative fines and orders, an expanded definition of consumer, and clearer provisions against anti-competitive practices and abuse of buyer power. These changes aim to align Malawi's competition law with international best practices, foster a more competitive market environment, and provide robust protection for consumers, thereby profoundly impacting legal and business operations across various sectors.

The Competition and Fair Trading Commission (CFTC) stands as a pivotal institution in Malawi's economic landscape, tasked with fostering a competitive market environment and safeguarding consumer interests. Established under the Competition and Fair Trading Act (CFTA), the Commission's role has recently undergone a significant transformation with the enactment of the CFTA 2024. This new legislation, which came into force on July 1, 2024, marks a substantial overhaul of the country's competition and consumer protection framework, replacing the outdated 1998 Act.

The impetus for this legislative reform stemmed from identified gaps in the previous Act, which hindered effective enforcement and failed to adequately address modern market dynamics. The CFTA 2024 introduces a raft of new guidelines and enhanced powers for the CFTC, aiming to align Malawi's regulatory regime with international best practices in competition and consumer protection law. For legal practitioners, understanding these changes is crucial, as they redefine compliance obligations for businesses, reshape merger and acquisition processes, and provide the CFTC with more potent tools to combat anti-competitive conduct and unfair trading practices. This article will delve into the core aspects of the CFTC's mandate, the key provisions of the CFTA 2024, and their practical implications for the legal and business community in Malawi.

The Competition and Fair Trading Commission (CFTC) was initially established under the Competition and Fair Trading Act of 1998, with a broad mandate to regulate, monitor, control, and prevent acts or behaviours that could adversely affect competition and fair trading in Malawi. However, over time, the limitations of the 1998 Act became apparent, particularly concerning the Commission's enforcement capabilities and its ability to keep pace with evolving market complexities. A critical turning point was the 2023 High Court ruling in *CFTC v Airtel Malawi Plc*, Civil Appeal Cause No. 17 of 2023, which determined that the 1998 Act did not empower the Commission to impose administrative fines directly on infringers.

This judicial pronouncement significantly weakened the CFTC's regulatory teeth, highlighting the urgent need for legislative reform. Consequently, the Competition and Fair Trading Act of 2024 was passed by Parliament on April 5, 2024, assented to by the President on May 19, 2024, and officially commenced on July 1, 2024. The new Act explicitly aims to address the shortcomings of its predecessor by providing for an improved regulatory mandate, better regulation of anti-competitive business conduct and unfair trading practices, more detailed provisions on merger control, and an enhanced enforcement mechanism. The CFTC operates as an autonomous government agency, with its decision-making authority vested in a Board of Commissioners, while a Secretariat manages its day-to-day operations and conducts investigations.

The CFTA 2024 introduces several transformative provisions that significantly enhance the CFTC's regulatory and enforcement framework. Foremost among these is the explicit grant of power to the CFTC to issue administrative orders, including substantial financial penalties. Under the new Act, fines can be imposed up to 5% of annual turnover for individuals and up to 10% of annual revenue for companies found in violation of the Act. This directly rectifies the enforcement gap identified in the *CFTC v Airtel Malawi Plc* case, providing the Commission with a robust deterrent against anti-competitive and unfair trading conduct. The CFTC has already demonstrated its willingness to exercise these new powers, as evidenced by recent enforcement actions against commercial banks and other companies, imposing millions in fines and ordering refunds for unfair consumer practices.

Another pivotal change is the shift from voluntary to mandatory notification of mergers and acquisitions. The 1998 Act allowed mergers with potentially harmful effects to proceed without prior authorization. The CFTA 2024 now mandates notification for transactions that meet specific thresholds, which were gazetted in December 2024. These thresholds require notification if the combined annual turnover or value of assets exceeds MK10 billion, or if the annual turnover of the target undertaking exceeds MK5 billion. This suspensory merger control regime ensures that the CFTC can scrutinize proposed transactions for their potential impact on competition and the broader public interest, including effects on specific industrial sectors, employment levels, and the viability of failing firms, before they are consummated.

The CFTA 2024 also broadens the scope of consumer protection. The definition of 'consumer' has been expanded to encompass users of technology, digital products, and those who use goods or services for the production of other goods or services, reflecting the evolving digital economy. Furthermore, the Act explicitly outlines various unfair trading practices, such as failure to provide warranties, improper labelling, non-disclosure of material information, excessive or exploitative pricing, and the imposition of unfair terms in consumer contracts. These detailed provisions provide clearer guidance for businesses and stronger recourse for consumers. The Act also addresses the previously neglected area of abuse of buyer power, which is crucial for protecting smaller suppliers from dominant purchasers.

In terms of prohibited anti-competitive practices, the CFTA 2024 reinforces prohibitions against traditional cartel conduct, such as price-fixing, market sharing, and bid-rigging, which are deemed *per se* illegal. It also continues to prohibit abuse of dominant market positions, including imposing unfair prices, limiting production, refusing to supply, and engaging in predatory behaviour. The Commission's jurisdiction extends to all economic activities within or affecting Malawi, including those by government enterprises, ensuring a comprehensive application of competition principles. The alignment with international best practices and Malawi's participation in the COMESA competition-law area further underscore the CFTC's commitment to a robust and globally consistent regulatory approach, often involving collaboration with the COMESA Competition Commission (CCC) which is also headquartered in Lilongwe.

While the CFTA 2024 represents a significant advancement, its effective implementation will depend on consistent enforcement, clear guidelines, and ongoing public and business awareness campaigns. The CFTC has indicated its commitment to these areas, including conducting sensitization workshops and drafting various guidelines to clarify the new provisions. The increased parliamentary scrutiny over commissioner appointments also aims to bolster the independence and integrity of the Commission.

The Competition and Fair Trading Commission, empowered by the new CFTA 2024, has entered a new era of enhanced regulatory authority and enforcement capability in Malawi. The legislative reforms address critical gaps in the previous framework, providing the CFTC with the necessary tools to effectively promote competition, curb anti-competitive practices, and robustly protect consumer welfare. The introduction of mandatory merger notification, significant administrative penalties, and expanded consumer protection provisions signals a more proactive and impactful regulatory environment.

For legal practitioners and businesses operating in Malawi, these changes necessitate a thorough review of existing practices and compliance frameworks. Companies must now be acutely aware of the mandatory merger notification thresholds, the expanded definitions of anti-competitive and unfair trading practices, and the increased financial risks associated with non-compliance. Proactive engagement with the CFTC's guidelines and a commitment to voluntary compliance will be essential to navigate this strengthened regulatory landscape. The CFTC's ongoing efforts to raise awareness and issue further guidance should be closely monitored, as the Commission continues to shape a fairer and more competitive market for all stakeholders in Malawi.