Articles and Publications
- Articles and Publications
The years 2019 and 2020 have undoubtedly given rise to a great promotion of competition law in Morocco after the reactivation of the Competition Council as the activity of the latter has been and continues to be important under the leadership of its President Mr. Driss Guerraoui. The media have also contributed to this promotion by relaying the activity of the Council, thereby raising awareness among the general public on subjects and issues largely unknown but especially the key role to be played by the constitutional body that is the Competition Council.The reactions to the paint tokens and fuels files testify to the impact of the Competition Council, the total deregulation of certain markets that the Council is looking into, but above all, the exhaustiveness of the existing competitive subjects that the bad students did not think they would ever have to worry about.
As a reminder, the practice of presence tokens within the paint market, a market that is oligopolistic where two operators hold nearly two-thirds of the market share, consists in introducing tokens into the paint buckets that the painter recovers to exchange them for cash, without the consumer knowing it or that this money does not benefit him directly or indirectly.Consequence? Painters who favor producers offering the best tokens to the detriment of quality, customers paying a price higher than the market value of the bucket, and a competition that is no longer based on quality and price but on the greed of painters and the offerings of producers.However, Morocco is not a country where the subject is new, because long before the reactivation of the Competition Council in December 2018, before the promulgation of Law 104-12 on the freedom of prices and competition in 2014 and before it Law 06-99, Morocco had adopted, after its independence and as early as 1957, Dahir No. 1-57-342 on price regulation and control.
This lack of eminence of Competition Law in the past seems to me to be the result of a post-protectorate development which imposed exorbitant measures towards the empowerment of the Moroccan economy and its appropriation by Morocco under the impetus of the State (which corresponds to the wave known as the “Marocanization” of key industries) and then a wave of liberalization marked by the exit of the State and other institutional operators in favor of full competition between private, national and international operators. The evolution of the fuel sector and the gradual liberalization of prices are a good illustration of this.Today, Law 104-12 relating to the freedom of prices and competition is a formidable tool for regulating competition in Morocco and constitutes, alongside Law 31-08 on consumer protection and other legislation specific to certain sectors of activity, the competitive legal framework to which operators in the Moroccan market must submit and within which they can navigate serenely, which can only improve competition in Morocco as legal security is the prerequisite for any institutionalization of standards or best practices. Let us also understand that any legal vacuum or gray area are precursors to the development of bad practices.
The place occupied by the Competition Council on the various economic sectors and the intense activity relayed by the national and international media in some cases are all indicators of the growing importance of the subject and this is to be welcomed!
Indeed, a market regulated by a proactive competition authority which, through its various consultative, monitoring, guidance and sanctioning prerogatives, guides market operators in understanding the context in which their activity must take place and sanctions their deviations, can only be a market in which competition intensifies and cleans up to the ultimate benefit of the consumer. Through the virtuous effect of price competition leading to an increase in the consumer’s purchasing power, the entire economy is strengthened.
Although the adoption of Law 104-12, the reactivation of the Competition Council, the media coverage of its activity, the conclusion of cooperation agreements with international competition authorities and the organization of workshops are things to be praised, the work of building the competitive framework of the Kingdom is far from being completed.
On a first aspect, the Kingdom has yet to establish its own jurisprudence in this field. It is understandable that in less than two years it will not be completed, but the effort must be invested in the publication of the Council’s decisions, but especially the decisions of the Court of Appeal and the Court of Cassation as a last resort. The rationality of the Council’s practice and the legitimacy of its positions both nationally and internationally are at stake.
Indeed, where the Competition Council has been endowed with quasi-jurisdictional power enabling it to impose sanctions, practice will ensure that the Competition Council’s decisions will be confirmed, overturned and supplemented as a last resort by the Supreme Court (Cour de Cassation). Only in this way will a body of case law be established that will provide greater legal certainty for operators, and the non-publication of these decisions would be a considerable loss for competition law practitioners and economic operators.
To date, and this is understandable, professionals but also the Competition Council sometimes have no choice but to refer to the case law of the French competition authority, the European Commission or Spanish case law on certain specific points. This can be understood in an interim manner, but should not become the norm as the political, economic and social contexts are not the same from one country to another. It should be remembered that the judicial sphere is a space for the expression of the sovereignty of the Kingdom and that it is not good for the legislative work of one State to be interpreted in the light of the jurisprudence of another State.
On a second aspect, therefore, the Competition Council must set itself up as an interpreter of Law 104-12 for the benefit of market operators and consumers in order to clarify the grey areas and provide the tools or the full exploitation of our legislation.
By way of example, Decree 2-14-652 adopted for the application of Law 104-12 provides, as part of the documents to be provided for the control of an economic concentration operation, a table presenting the financial data of the companies concerned for the last three fiscal years.
In France, a country from which our competition law is heavily inspired, this same document that is required is provided as a model by the French Competition Authority. Relying on this model was understandable following the entry into force of Law 104-12 at the end of 2018 but is no longer required
Another example, this time widely publicized in the media, Article 39 of Law 104-12 provides that monetary penalties must be proportionate (i) to the seriousness of the alleged acts, (ii) to the extent of the damage caused to the economy, (iii) to the situation of the sanctioned firm and the group to which it belongs, and (iv) to the possible repetition of prohibited practices. These are four (4) criteria that must be taken into account in determining a financial penalty of up to 10% of the worldwide turnover of the company in question or of the group to which it belongs. 4 criteria subject to interpretation and quantification determining a sanction that can reach tens of billions of dirhams in the case of worldwide
The recent news on the fuel file monitored by the Competition Council has raised several criticisms of the procedure, in particular “a truncated interpretation and violation of article 39 of the law relating to the freedom of prices and competition”. Apart from all other aspects of the subject, the text of Article 39 of Law 104-12, strictly similar to the corresponding article of French law, has given rise to the publication by the French Competition Authority of an analysis grid that is enforceable and provides any person with the means to objectively calculate
the sanction incurred by applying the above-mentioned criteria. The use of this grid has given rise to an extensive body of case law, including decisions of the Paris Court of Appeal and the Cour de Cassation, which have reduced the penalties imposed by the French Competition Authority and refined the grid. Returning to our situation, such a grid does not exist in Morocco and no case law has had the opportunity to be published on the subject. How then to consider that the interpretation of Article 39 could be truncated when there is no interpretation tool? Admittedly the above-mentioned grid and the French jurisprudence exist, but the Kingdom and its jurisdictions are sovereign and both the grid and the French or European jurisprudence can be purely and simply considered unenforceable. That being said, updating our system is not the only priority because the subject matter is extremely evolving and international experience shows that competition authorities must play a key role in regulating competition in new markets. This was the case after the creation of the Internet and continues to be the case because the movement of digitalization of the economy is still going on and has been strongly boosted by the Covid-19 pandemic in the world. So many upheavals to which the Competition Council must react in order to promote full competition and limit the deviations of economic operators who can only understand each other. The interest of a company is the creation of value for its shareholders and the interest of the Council is the existence of healthy competition beneficial to the consumer, no need to draw a picture to understand that these are structurally divergent interests. When the competitive standard exists, it is in the company’s interest to respect it because their violation leads to sanctions and therefore to a reduction in value. When the standard does not exist, it is contrary to the interest of any company to impose limitations that reduce the value created for its shareholders.
Finally, competition law must be established as a fundamental matter in Moroccan universities, and the Competition Council, the faculty, and practitioners must contribute to this training and awareness effort because our country lacks specialized practitioners. The subject is nowadays mainly assumed by foreign firms, often French, as our law is similar to theirs and as the practice provided by the Competition Authority and the courts give them a considerable lead over the Moroccan practitioner. The latter is limited to the Law, its decree and a few decisions of the
Competition Council mainly related to merger control and not reaching the hundreds of pages rich in doctrine and jurisprudence that can reach the decisions of the French Competition Authority or the European Commission.