TIRI MASAWI
The Namibia Competition Commission (NaCC) has rejected claims that it has become a powerless regulator after minister of industries, mines and energy Modestus Amutse overturned two of its major decisions involving deals worth more than N$2.3 billion.
The reversals came just seven months after Amutse was handpicked to replace fired Natangwe Ithete.
Amutse’s decisions on the Nasan Energies–Vitol fuel supply agreement and the Ohorongo Cement–Cheetah Cement merger have created debate over whether the commission still has the power to enforce competition rules or whether ministerial intervention is weakening its role.
The two transactions include Whale Rock Cement’s acquisition of Schwenk Namibia, the parent company of Ohorongo Cement, in a deal estimated at N$1.5 billion, and Nasan Energies’ acquisition of 52 fuel service stations divested by Vivo Energy, valued at about N$817 million.
Critics argue that repeated ministerial reversals could make the commission appear ineffective, while NaCC insists that the minister is acting within powers provided by the law.
NaCC spokesperson Dina //Gowases rejected suggestions that the commission has lost its authority.
“The commission is not a toothless institution. It is still carrying out its mandate within the parameters of the Competition Act, and therefore it will continue to do its work,” she told Namibia Business Review last week.
She said the commission’s role remains ensuring fair competition and protecting consumer choice.
“We are mandated with the business of looking at the conduct of how businesses operate within the sector to ensure that there are no barriers to entry, that everyone is competing fairly, and that no one is being hindered from growing in whichever sector they choose to do so,” she said.
The debate now facing Namibia is whether the current competition system strikes the right balance between allowing the government to consider wider economic interests and ensuring that an independent regulator can protect competition.
//Gowases said the commission does not believe the minister is abusing his powers.
“We are not going to say that the minister has too much power. It is within his mandate to do so,” she said.
She added that the commission’s ultimate goal is to ensure consumers have choices.
“Ultimately, the mandate of the commission trickles down to the fact that we would want consumers, as users of any services, goods, or products, to have that choice to go to any business entity where we see it fit, where we can afford it, or where we like the quality and so forth,” //Gowases said.
//Gowases said the commission is not being undermined because the Competition Act allows the minister to review and change its decisions.
“With regard to the minister overturning the decisions or determinations that we are making, it is actually within his power as mandated by the Competition Act.”
THE FINAL SAY
//Gowases said Section 49 of the Competition Act No. 2 of 2003 gives the minister powers to confirm, reject, overturn or amend decisions made by the commission.
“He has the right and is empowered, and those are vested powers within him by the Competition Act, whereby he can either overturn our determination, reject it, confirm our determination, or make additional conditions to the determination,” she said.
She said the commission understands that the minister looks at issues beyond competition when reviewing major transactions.
“What the minister does is that he looks at the holistic picture,” //Gowases said.
She explained that the minister considers how decisions could affect economic growth, the market, small and medium enterprises, historically disadvantaged groups and youth participation.
“Whatever determination the Minister makes, it is within those parameters of economic growth that the Minister makes those determinations,” she said.
OHORONGO-CHEETAH MERGER: JOBS AT THE CENTRE
In overturning NaCC’s decision on the Ohorongo Cement and Cheetah Cement merger, Amutse said he was guided by the law and the need to protect Namibian jobs.
In a Government Gazette notice, the minister stated that he had overturned the commission’s decision in terms of the Competition Act.
“I have made a determination to overturn the decision of the commission. The reasons for the determination are set out in the schedule,” Amutse said.
The minister approved the merger but attached conditions.
These include that the transaction should not result in job losses and that NaCC must monitor whether the merger creates a monopoly or gives the merged company a dominant position in the cement market.
Amutse also ordered that the Cheetah Cement plant should not be destroyed because of the merger.
Instead, he said options must be explored to ensure the plant remains operational and is transformed into a productive facility capable of employing Namibians.
Whale Rock Cement welcomed the decision, saying the merger would protect jobs and improve the viability of the cement industry.
Company spokesperson Tabby Moyo said both cement plants have struggled because Namibia’s market is too small to allow them to operate at full capacity.
“We are delighted by the Minister’s decision as it will safeguard jobs in the cement industry. As we said in our submission to NaCC, the merger would not result in any Namibian losing their jobs. In fact, more jobs could result from this merger,” Moyo said.
However, the Construction Industries Federation of Namibia (CIF) has warned that the merger could reduce competition and negatively affect local contractors.
MONOPOLY FEARS
Seven days ago, Amutse also overturned NaCC’s decision involving Nasan Energies’ acquisition of 52 fuel stations from Vivo Energy.
The transaction has an enterprise value of US$50 million (approximately N$817 million). The Namibia Competition Commission initially approved Nasan Energies’ acquisition of 52 Shell and Engen service stations from Vivo Energy. However, the initial approval included a five-year ban preventing Nasan from sourcing fuel from Vitol (Vivo’s parent company) to protect market competition. This appeared to be the commission’s attempt at preventing a monopoly in Namibia’s petroleum market. This restriction was successfully overturned by Amutse this month.
The minister said his decision was influenced by economic pressures caused by global energy instability linked to the war in Iran.
He said the conflict had created a financial burden on Namibia’s fuel-importing system.
‘THE MINISTER COULD WEAKEN INSTITUTIONS’
Public policy analyst Ndumba Kamwanyah warned that the decisions could create risks for competition and open key sectors to monopoly control.
Kamwanyah said the minister needs to clearly explain the reasons behind his decisions.
“It is important for the minister to deeply share with the public what is influencing his decision at such a vital time. He might risk both an overreach as well as creating monopoly in these key sectors,” Kamwanyah said.
He warned that repeated reversals could damage confidence in institutions created to regulate important sectors.
“In future we risk a situation where these institutions might be seen as useless and unable to execute their work,” he said.
“There are reasons why certain laws are there and there are also reasons why certain institutions are there. The minister needs to support them.”
COMMENTS