September, 2022

COMPETITION / ANTI-TRUST REGULATION IN NIGERIA:

RESTRICTIVE AGREEMENTS
Introduction
The Federal Competition and Consumer Protection Act (“FCCPA”), 2018 is generally the primary
legislation for the regulation of competition and protection of consumers in Nigeria. One of the
salient objectives of the FCCPA is to prohibit restrictive or unfair business practices that prevent
or restrict competition (as captured in Part VIII (Section 59-69) of the FCCPA).

In furtherance of the provisions of the FCCPA, the Federal Competition and Consumer Protection
Commission (“FCCPC”) released the Restrictive Agreement and Trade Practices Regulations,
2022 (“Regulations”) which provides a framework for the implementation of the provisions of the
FCCPA on restrictive agreements.

We have highlighted below some notable points regarding the regulation of restrictive agreements
in Nigeria.

1. What are Restrictive Agreements?

Restrictive Agreements under the FCCPA are agreements that prevent, restrict or distort
competition in any market. This can be done through price fixing, market allocation,
limitation of production/ distribution of goods and services, collusive tendering, and tied
selling. Agreements that involve any of the above activities are by virtue of the FCCPA,
generally unlawful and have no legal effect.

2. What is the criteria for determining whether an agreement is restrictive?

An agreement would be deemed restrictive where the purpose of the agreement is to restrict
competition (purpose-based restriction of competition) or where the effect of such agreement
restricts competition (effect-based restriction of competition).

a) Purpose-based Restrictive Agreements

According to the Regulations, in determining whether an agreement is purpose-based
restrictive, the FCCPC will consider: the content and objectives of the agreement; the
actual conduct of the parties to the agreement; and the legal and economic context in
which the agreement is applied. The FCCPC may also consider the subjective intention
of a party to the agreement where the implementation of the agreement reveals a
purpose-based restriction of competition.

b) Effect-based Restrictive Agreements

In determining whether the effects of an agreement is restrictive, the FCCPC will
consider the actual and potential effects of the agreement. In identifying Effect- based
restrictive agreements, the Regulation provides that such agreements:

i. should have or be likely to have an appreciable adverse effect on at least one

parameter of competition in the market eg price, output, product quality, product
variety or innovation;

ii. appreciably reduce competition between the parties to the agreement or between
any of the parties and a third party, by reducing the party’s decision-making
independence;
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 September, 2022
iii) should enable the parties to profitably raise prices or reduce output, product
quality, product variety or innovation.
The Regulations also provide that the FCCPC would consider: the nature and context of the
agreement; the extent to which the parties to the agreement possess some degree of market
power; the extent to which the agreement contributes to the creation, maintenance or
strengthening of their market power e.t.c., in determining whether the effects of the
agreement is restrictive.

3.What are the Criteria for Obtaining an Exemption to Execute Restrictive

Agreements?
A restrictive agreement will not be deemed to be illegal and void where entry into such an
agreement has been authorized by the FCCPC. According to the FCCPA and the Regulations,
the FCCPC is only empowered to grant such authorisations where all the of conditions set out
below are met.
a) The agreement is required to contribute to the improvement of production or
distribution of goods and services or the promotion of technical or economic progress;
b) Consumers must receive a fair share of the resulting benefits of (a) above;
c) The restrictions imposed in the agreement should be limited to those which are
indispensable to the attainment of the objectives in (a) above; and
d) The agreement should not permit the possibility of eliminating competition in respect of
a substantial part of the goods and services concerned.
It is important to note that the burden of proving that the restrictive agreement complies with
the a-d above rests on the party applying for the authorization of the restrictive agreement.

4. How Can a Party to a Contemplated Restrictive Agreement Obtain an

Exemption?
Parties to a contemplated agreement can apply for an exemption by submitting an application
to the FCCPC for its decision as to whether the agreement is restrictive and including a request
for exemption. The applicant will also be required to file a copy of the contemplated agreement
or a document that provides full details of the agreement.

5. How can Parties ensure that their Contemplated Agreements are not
Restrictive?
Parties to an agreement that suspect, or are of the opinion that their contemplated agreement
infringes on the provision of the FCCPA concerning restrictive agreements, are by the
Regulations permitted to apply to the FCCPC for an assessment of the contemplated
agreement. This can be done by submitting a notification to the FCCPC in respect of the
agreement in addition to a copy of the agreement or a document containing full details of the
agreement and supporting information on the agreement. The FCCPC is required to provide
guidance to the applicant as to whether the agreement is a restrictive agreement and
prohibited within 40 days of the application.
Conclusion
The provisions of the FCCPA and the Regulations on restrictive agreements are useful in
developing Nigeria’s anti-trust legislation and entrenching fair market practices in support of
economic growth. A useful point to note about the regulations is that it provides detailed
guidelines on how to determine restrictive agreements and the criteria for obtaining exemptions,
thereby limiting the discretionary powers of the FCCPC.
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