Malawi Competition and Fair Trading Commission Enacts New Act

The Competition and Fair Trading Commission (CFTC) of Malawi has significantly bolstered its regulatory oversight of inter-business "working relationships" with the enactment of the Competition and Fair Trading Act of 2024. This new legislation, which repealed the 1998 Act, introduces robust provisions aimed at preventing anti-competitive agreements, curbing the abuse of dominant market positions, and streamlining merger control. For legal practitioners, the 2024 Act necessitates a comprehensive review of client compliance strategies, particularly concerning horizontal and vertical agreements, and mandates stricter adherence to merger notification requirements. The enhanced enforcement powers, including substantial administrative fines, underscore a new era of competition law enforcement in Malawi, demanding proactive legal counsel to mitigate risks and ensure fair market conduct.

The landscape of competition law in Malawi has undergone a transformative shift with the recent enactment of the Competition and Fair Trading Act of 2024 (the "2024 Act"). This pivotal legislation, which came into force on July 1, 2024, repeals the previous Competition and Fair Trading Act of 1998, ushering in a more robust and comprehensive framework for regulating market conduct. For practising attorneys and legal professionals, understanding the nuances of this new Act is paramount, particularly concerning how it governs "working relationships" between businesses, whether through formal agreements, informal collaborations, or the exercise of market power.

The Competition and Fair Trading Commission (CFTC), established under Section 4 of the Act, is the autonomous agency tasked with regulating, monitoring, controlling, and preventing acts or behaviours that adversely affect competition and fair trading in Malawi. The 2024 Act empowers the CFTC with enhanced tools to achieve its mission of fostering a competitive market environment and protecting consumer welfare. This article delves into the key provisions of the 2024 Act that directly impact inter-business relationships, highlighting the implications for compliance and risk management for enterprises operating within Malawi.

This article posits that the 2024 Act represents a significant strengthening of Malawi's competition law regime, demanding renewed vigilance from legal practitioners in advising clients on their commercial arrangements and market conduct. The expanded scope, clearer prohibitions, and more potent enforcement mechanisms necessitate a proactive approach to ensure that business "working relationships" align with the country's competition policy objectives.

The Competition and Fair Trading Commission (CFTC) was initially established under the Competition and Fair Trading Act of 1998 (Cap 48:09 of the Laws of Malawi) with a mandate to promote competition and fair trading practices across the Malawian economy. Its core objectives included regulating mergers and acquisitions, monitoring monopolies and concentrations of market power, prohibiting anti-competitive practices, and protecting consumers from unfair trading. Over the years, the CFTC has actively pursued these objectives, investigating and adjudicating cases related to restrictive business practices and unfair trading conduct.

However, the previous legislative framework presented certain limitations that hindered effective enforcement. Notably, a significant challenge arose regarding the CFTC's power to impose administrative fines. The High Court, in the 2023 case of *Airtel Malawi Plc v Competition & Fair Trading Commission*, ruled that the 1998 Act did not empower the Commission to directly impose fines on infringers. This judicial pronouncement underscored the need for legislative reform to align Malawi's competition law with international best practices and to provide the CFTC with the necessary teeth to deter anti-competitive behaviour. The 2024 Act was thus developed to address these gaps, enhance enforcement capabilities, and reflect current market dynamics, thereby strengthening the regulatory environment for business interactions.

The Competition and Fair Trading Act of 2024 introduces several critical provisions that profoundly impact how businesses structure their "working relationships" in Malawi. A central focus remains on prohibiting anti-competitive agreements, which are broadly defined to include any agreement, decision, or concerted practice likely to prevent, restrict, or distort competition to a substantial extent. Horizontal agreements, particularly cartels involving competitors, are treated with particular severity. The Act explicitly prohibits *per se* agreements to fix prices, share markets or sources of supply, limit or control production, or engage in bid rigging. Legal practitioners must advise clients that such collusive conduct, whether formal or informal, carries significant penalties under the new regime.

Beyond cartels, the 2024 Act also addresses various vertical restraints and other restrictive business practices that can affect working relationships between firms at different levels of the supply chain. These include exclusive dealing arrangements, tying and bundling, and resale price maintenance. While not all such practices are *per se* prohibited, their legality hinges on a thorough assessment of their object or effect on competition. The CFTC may authorise certain agreements if they are consistent with the Act's objectives and the advantages to Malawi outweigh the disadvantages, though cartels and abuse of dominance are expressly excluded from such authorisation. This necessitates a nuanced legal analysis of commercial contracts and distribution agreements to ensure compliance.

Another crucial area of regulation concerns the abuse of a dominant market position. The Act prohibits enterprises, whether independently or collectively, from exploiting their market power to impose unfair purchase or selling prices, limit production or market access, or engage in predatory behaviour. This extends to refusing to supply particular enterprises or applying different conditions to equivalent transactions, thereby distorting competition. The CFTC monitors dominant enterprises to prevent such abuses, and the 2024 Act now includes measures to address the abuse of buyer power, further broadening the scope of regulated relationships.

The 2024 Act also significantly reforms the regulation of mergers and acquisitions, which represent a fundamental change in business working relationships. It introduces a mandatory and suspensory merger notification regime, meaning that qualifying mergers must be notified to and approved by the CFTC before implementation. The CFTC now applies a public interest test when evaluating proposed mergers, considering factors such as the effect on specific industrial sectors, employment levels, and the saving of failing firms. This expanded assessment framework requires merging parties to provide comprehensive justifications for their transactions, moving beyond a purely competition-focused analysis.

Crucially, the 2024 Act grants the CFTC enhanced enforcement powers, directly addressing the limitations identified in the *Airtel Malawi Plc* case. The Commission can now impose administrative orders, including substantial administrative penalties of up to 10% of an enterprise's annual turnover or 5% of an individual's income for violations. These heightened penalties, coupled with the power to order redress such as refunds or termination of unfair contracts, signify a more formidable regulatory environment. Furthermore, the CFTC is empowered to conduct market inquiries and studies where it suspects anti-competitive practices or unfair trading within a sector, allowing for systemic investigations into prevalent working relationships. The CFTC also maintains strong working relationships with regional bodies like the COMESA Competition Commission and various national sector regulators, which can influence jurisdictional considerations and enforcement actions.

The Competition and Fair Trading Act of 2024 marks a watershed moment for competition law and its enforcement in Malawi. For businesses and their legal advisors, the Act fundamentally redefines the parameters of acceptable "working relationships" within the market. The strengthened prohibitions against anti-competitive agreements, the expanded scope of abuse of dominance provisions, and the mandatory, suspensory merger control regime, coupled with significant administrative penalties, collectively demand a heightened level of compliance and strategic foresight.

Practitioners must proactively engage with their clients to review existing commercial agreements, internal policies, and market conduct to ensure full alignment with the new Act. This includes conducting thorough competition law audits, updating compliance programmes, and providing targeted training to management and staff. Failure to adapt to this enhanced regulatory landscape carries substantial financial and reputational risks. The CFTC's invigorated mandate signals a clear commitment to fostering a fair and competitive market, making diligent legal counsel an indispensable asset for navigating Malawi's evolving competition law environment.