Assessing correctly? A balanced approach to evaluating African competition authorities

In principle, the most straight forward methodology for assessing the performance of a competition authority (“CA”) is the use of the count data method - counting the number of cases tackled by the CA. However, this method conveys nothing about important quantifiers such as the quality or wider importance of decisions taken by the CA, long-term investments in methods, guidelines set, staff training and retention or influence on deterrence or legislative reform. Though indices such as the Global Competition Review (GCR) and the Global Competitiveness Index measure competition performance narrowly, these indices have a painfully limited coverage of Africa. This blog highlights why the development of a standard methodology for assessing the performance of African CA’s remains a challenging process due to the different economic, social and market conditions existing in African countries.

In the last two decades, attempts have been made by researchers and policymakers to produce a standard methodology for assessing the performance of CAs globally. Given that the mandates of CAs consist of detecting and deterring anti-competitive practices, the assessment of measurable and non-measurable objectives can be challenging. Just like any CA across the world, CAs in Africa face the same challenges when measuring performance. While specific indicators can be identified for such processes, our challenge remains how to bring a cross-country comparison dimension to these performance assessments when each country has different socio-economic conditions. For example, African countries have wide gaps with regards to their level of economic development or markets operation. These differences consequently influence their allocated budgets, priorities and the work of their CAs.

According to UNCTAD, a CA’s success can be assessed at both microeconomic and macroeconomic levels using qualitative and quantitative methods. The most common methodologies identified are count data (number of cases), surveys, peer review and case impact assessments. Undoubtedly, such assessments can only effectively be performed when relevant data is available. However, given the quality of an agency’s processes, case selection and, especially, decisions, it may not be feasible to create a direct measure that is comparable across CAs. Such methodology does not permit international comparisons since very few cases are assessed in multiple jurisdictions, and when they are, local competitive circumstances often differ substantially. Studies such as Armoogum and Lyons (2015) show that other factors can contribute to the success of a CA, such as the type of law (common v/s prosecutorial), the institutional design (judicial, bifurcated or integrated), the level of governance (corruption, political stability, government effectiveness, voice and accountability, regulatory quality and rule of law), the budget allocated, its level of development and experience (age).

Over time, while the GCR rating and the GCI have been developed, with the more popular one being the GCR rating, these two, have very limited coverage of Africa. The GCR rating, which is based mostly on data related to enforcement activities supplied by CAs, GCR’s own news reporting and other publicly available information provides benchmarking reports, data, and analyses antitrust enforcements from around the globe, unfortunately does not do well at reporting enforcement activities in Africa. For example, in 2024, only two African countries namely South African and Egypt were covered.

The African continent shares 18% of the world population and generates only 2% of the world’s Gross Domestic Product.  It is unique in terms of market structures, cultures, levels of economic development and experience of its competition authorities. While the first competition law in the world was adopted in Canada in 1889, the first competition legislation in Africa was established 100 years later in Kenya. It was then followed in 1998 by South Africa with the country’s modern competition law. Subsequently, competition law and policy on the African continent has been evolving. Today, more than 30 of 54 African countries have a CA. Five regional competition authorities have been set up. They are ECOWAS Regional Competition Authority, COMESA Competition Commission, East Africa Community, Economic Community of West African States and the West African Economic and Monetary Union (WAEMU). It is worth mentioning that Africa will soon have a Supernational Competition authority with the African Continental Free Trade Area (AfCFTA).

Given that there is no one size fits all approach in competition policy, it is crucial that the assessment of the performance of a CA and the selection of key indicators is done cautiously. For example, a CA doing more merger cases than abuse of dominance and cartel cases, may not mean it is not doing well. It may be a matter of prioritization given its budget constraints or conditions of the markets prevailing in the country. Thus, having the right balance between chosen indicators is essential. The best method would be a combination of existing methodologies. Indicators could include the number of cases (mergers, abuse of dominance, cartels, market studies), number of leniency cases received, the legal framework (independence and age of the CA), budget and staff. Other useful indicators are results of surveys conducted among stakeholders, including the business community, and post evaluation of cases to measure consumer benefit. African CAs are relatively young and it is important that indicators reflect their real performance given certain constraints. It might be interesting to incorporate an intertemporal dimension into the comparative assessment of performance across CAs in Africa.

References

1. Armoogum, K. P. (2016). Assessing the comparative performance of competition authorities. PhD Thesis, University of East Anglia. Retrieved from https://core.ac.uk/download/pdf/77029266.pdf

2. Davies, S., & Ormosi, P. (2012). A comparative assessment of methodologies used to evaluate competition policy. Journal of Competition Law and Economics. Retrieved from https://www.researchgate.net/publication/274525250_A_comparative_assessment_of_methodologies_used_to_evaluate_competition_policy

3. Davies, S., & Ormosi, P. (2012). Assessing competition policy: Methodologies, Gaps and Agenda for future research. University of East Anglia. Retrieved from https://ueaeprints.uea.ac.uk/id/eprint/28401/1/Working_Paper_10-19.pdf

4. Development, U. N. (2020). Evaluation of the impact of the performance of the national competition authorities participating in the COMPAL programme within their respective markets. Retrieved from https://unctad.org/system/files/official-document/ditcclp2019d1_en.pdf

5. Hüschelrath , K., & Leheyda , N. (2010). A methodology for the evaluation of competition policy. European Competition Journal. Retrieved from https://www.researchgate.net/publication/47872511_A_Methodology_for_the_Evaluation_of_Competition_Policy

6. Masson, J. (2018, October 26). Idea of one-size-fits-all competition law is naive, South African judge says. GCR News, p. 2018. Retrieved from https://globalcompetitionreview.com/article/idea-of-one-size-fits-all-competition-law-naive-south-african-judge-says

7. OECD. (2021). Methodologies to measure market competition. OECD Competition Committee. Retrieved from https://www.oecd.org/content/dam/oecd/en/publications/reports/2021/06/methodologies-to-measure-market-competition_acd00bf0/29bf31c1-en.pdf

8. Ogundele, O. (2022, March 29). An Africa-Focused Competition Performance Index. Competition Policy International. Retrieved from https://www.pymnts.com/cpi-posts/an-africa-focused-competition-performance-index/

   
   
   
   

   Disclaimer: The opinions expressed in this article are those of the author and do not reflect the views of the Competition Commission of Mauritius.

   
   

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Author's bio

Prishnee Armoogum is currently an Investigation Officer (Economics) at the Competition Commission in Mauritius and has been in the field of Competition/Antitrust for over 10 years. She has conducted numerous empirical studies assessing the performance of competition authorities and studied the degree of convergence of competition laws in the Southern African region. She was seconded to the Competition Commission of South Africa and has also worked as an intern at the Office of Fair Trading in the UK.

Prior to working in the competition space, she previously worked as a team lead in the private sector and as a part-time lecturer at the University of Technology in Mauritius. She has a PhD in Economics from the University of East Anglia, an MSc in Economics and Financial Management from Middlesex University, and a BSc (Hons) in Economics and Finance from the University of Mauritius.