Competition and Fair Trading Commission (CFTC) — MW Legal Update

Malawi's competition law landscape has undergone a significant transformation with the enactment of the Competition and Fair Trading Act, 2024 (CFTA 2024), replacing the 1998 legislation. This new Act substantially strengthens the regulatory framework against restrictive business practices (RBPs), empowering the Competition and Fair Trading Commission (CFTC) with enhanced investigative and enforcement capabilities. Key changes include expanded definitions of anti-competitive conduct, the introduction of mandatory and suspensory merger notification, and significantly increased penalties for violations, now up to 10% of annual turnover for companies. This article provides an overview of the updated legal provisions, the types of RBPs prohibited, and the implications for businesses operating in Malawi, highlighting the CFTC's renewed mandate to foster a competitive and fair market environment.

The regulatory landscape governing competition in Malawi has recently experienced a profound overhaul with the coming into force of the Competition and Fair Trading Act, 2024 (CFTA 2024) on July 1, 2024. This landmark legislation repeals and replaces the Competition and Fair Trading Act of 1998, ushering in a new era of competition law enforcement in the country. The impetus behind this legislative reform is to align Malawi's competition framework with international best practices and to address contemporary market dynamics, including the digital economy.

At the heart of the CFTA 2024 is the enhanced mandate of the Competition and Fair Trading Commission (CFTC), the primary regulatory body tasked with promoting competition and protecting consumer welfare. The new Act significantly bolsters the CFTC's powers, particularly in combating restrictive business practices (RBPs), which are detrimental to market efficiency, innovation, and consumer interests. For legal practitioners, understanding these changes is crucial, as they introduce more robust prohibitions, stricter enforcement mechanisms, and substantially higher penalties for non-compliance.

This article will delve into the core provisions of the CFTA 2024 concerning restrictive business practices, examining the types of conduct now explicitly prohibited or more effectively regulated. It will also explore the expanded powers of the CFTC and the implications of the new penalty regime, offering insights into what businesses and their legal advisors must consider to ensure compliance and mitigate risks in Malawi's evolving competitive environment.

The Competition and Fair Trading Commission (CFTC) was established under the Competition and Fair Trading Act, with a broad mandate to regulate, monitor, control, and prevent acts or behaviours that could adversely affect competition and fair trading in Malawi. Prior to the CFTA 2024, the 1998 Act provided the foundational legal framework, prohibiting anti-competitive trade practices, regulating monopolies, and protecting consumer welfare. However, the previous legislation had certain limitations, particularly regarding the CFTC's power to impose administrative monetary penalties, as highlighted in the 2023 *Airtel Malawi plc v Competition and Fair-Trading Commission* case, where the High Court reversed a CFTC fine due to the absence of such a provision in the then-existing law.

The CFTA 2024 represents a comprehensive update, designed to address these shortcomings and strengthen the enforcement regime. It expands on the provisions concerning anti-competitive business practices, aiming for more effective regulation and enforcement. The new Act also broadens the definition of 'consumer' to include users of technology and digital products, and introduces provisions to address the abuse of buyer power, which was not explicitly covered under the 1998 Act. These legislative enhancements reflect a commitment to fostering a more equitable and competitive market, aligning Malawi with international best practices in competition and consumer protection law.

The CFTA 2024 significantly broadens the scope of prohibited restrictive business practices, categorising them into several key areas. At its core, the Act prohibits any agreements, decisions, or concerted practices that are likely to prevent, restrict, or distort competition to an appreciable extent within Malawi. Per se prohibitions, meaning practices considered inherently anti-competitive regardless of their actual effect, primarily target cartels or collusive conduct. These include agreements to fix prices, share markets or sources of supply, limit or control production, market outlets, or technical development, and bid rigging.

Beyond cartel conduct, the CFTA 2024 also addresses the abuse of a dominant position. An enterprise is deemed dominant if it holds a market share of 40% or more, or possesses the capacity to eliminate or restrain competition or control prices. Prohibited abuses include imposing unfair purchase or selling prices, limiting production or market access to the prejudice of consumers, refusing to supply, applying discriminatory conditions to equivalent transactions, and engaging in predatory behaviour towards competitors. Notably, the new Act introduces specific provisions against the abuse of buyer power, addressing issues such as unjustified delays in payments, unilateral termination of contracts, demands for preferential terms, and refusal to receive or return goods without justifiable reason.

The enforcement powers of the CFTC have been substantially enhanced under the CFTA 2024. Crucially, the Commission is now expressly empowered to impose administrative monetary penalties for violations. For companies, these fines can be up to 10% of their annual turnover, while individuals face penalties of up to 5% of their annual income. This is a significant departure from the previous regime, which lacked clear provisions for such penalties, as evidenced by the *Airtel Malawi plc* case. The CFTC can also issue various administrative orders, including mandating refunds, requiring the return or exchange of defective products, withdrawing false advertisements, and cancelling unfair contracts. Recent enforcement actions, such as the fines imposed on FDH Bank plc and Standard Bank plc for unfair consumer practices, demonstrate the CFTC's readiness to utilise these new powers. The Act further empowers the High Court to enforce the Commission's orders, providing a robust mechanism for ensuring compliance.

While the CFTA 2024 provides a comprehensive framework, it also allows for certain anti-competitive acts, agreements, or understandings to be authorised by the Commission if they are consistent with the Act's objectives and the advantages to Malawi outweigh the disadvantages. This 'rule of reason' approach for certain practices, as opposed to per se prohibitions, provides a degree of flexibility. However, the increased penalties and the CFTC's proactive enforcement signal a stricter regulatory environment, requiring businesses to conduct thorough compliance audits and adjust their practices accordingly.

The enactment of the Competition and Fair Trading Act, 2024, marks a pivotal moment for competition law in Malawi, significantly strengthening the regulatory framework against restrictive business practices. Legal practitioners must advise their clients on the expanded scope of prohibited conduct, including explicit prohibitions on cartels and a more detailed approach to the abuse of dominant and buyer power. The most impactful change for businesses is undoubtedly the introduction of substantial administrative monetary penalties, which can now reach up to 10% of annual turnover, alongside other remedial orders enforceable by the High Court.

Practitioners should guide clients in reviewing their commercial agreements, market conduct, and merger strategies to ensure full compliance with the CFTA 2024. Proactive measures, such as internal competition law audits and employee training, are essential to mitigate the heightened risks of non-compliance. The CFTC's recent enforcement actions underscore its commitment to utilising its new powers, signalling a more vigilant and assertive regulatory environment. Businesses operating in Malawi must therefore prioritise competition law compliance to avoid severe penalties and reputational damage in this new era of competition enforcement.