Co-authored by Adriaan Lourens (candidate attorney) and Mohammed Dada (candidate attorney)

Earlier this year, the Committee responsible for Initial Determinations (CID), the adjudicative arm of the COMESA Competition Commission (CCC), approved a significant settlement reached between the CCC and a large multinational beverage company. This settlement follows an investigation by the Secretariat, the investigating arm of the CCC, into alleged anti-competitive vertical restraints in the beverage company’s distribution agreements across several COMESA member states. The case illustrates a growing trend of heightened scrutiny by African competition authorities of vertical agreements, aimed at safeguarding market access and fair competition.

Vertical restrictive practices are agreements between firms operating at different levels of the supply chain, such as between suppliers and distributors or retailers, which may lessen or prevent competition. Common examples include long-term exclusive distribution arrangements or territorial limitations within which distributors are allowed to sell.

Although such vertical agreements are generally permissible, they may attract scrutiny where their anti-competitive effects clearly outweigh any technological, efficiency or other pro-competitive gains. Historically, enforcement by African competition authorities against vertical restraints has been limited, but recent developments signal a growing willingness to challenge agreements that were previously considered permissible under competition law.

In the COMESA case, the Secretariat in its investigation found that the beverage company’s distribution agreements contained several vertical restrictions, including fixed distributor margins, bans on carrying competing brands, prohibitions against responding to passive sales, and territorial restrictions preventing sales outside designated regions.

Although the Secretariat acknowledged that single-branding restrictions can sometimes generate efficiencies, it alleged that, in this case, the anti-competitive effects outweighed any potential benefits. According to the Secretariat, the territorial limitations contravened the COMESA Competition Regulations, as they affected trade between COMESA member states and had the object or effect of preventing, restricting, or distorting competition. The Secretariat argued that by effectively partitioning the common market along national borders and limiting trade between COMESA member states, the restrictions caused significant competitive harm, which was exacerbated by the company’s dominant market share.

The Secretariat also alleged that the agreements imposed minimum resale price maintenance, requiring distributors to sell at or above specified prices. Minimum resale price maintenance is widely recognised as a serious infringement of competition law in most jurisdictions, as it restricts retailers’ ability to compete on price, often leading to higher consumer prices.

While the beverage company denied any contravention, it agreed to a settlement with the CCC, undertaking to:

• audit and amend its distribution agreements to remove the identified vertical restraints;
• cease enforcing the contested provisions;
• avoid including similar terms in future agreements;
• provide compliance training to staff, distributors and management on the issues raised; and
• pay administrative penalties totalling USD 900 000 (USD 300 000 per restriction).

This stricter approach to vertical agreements is also reflected in the CCC’s draft Competition and Consumer Protection Regulations published in 2024, which propose new outright prohibitions on vertical restraints such as absolute territorial protections, restrictions on passive sales and resale price maintenance.

Other African regulators have similarly intensified enforcement against vertical restrictions. In 2025, the Namibia Competition Commission (NaCC) concluded its investigation into a tripartite agreement between two telecommunications providers and a fibre optic supplier. The agreement granted exclusive use of the supplier’s fibre capacity to the providers for ten years, with automatic renewal. According to the NaCC’s investigation, these exclusivity clauses unlawfully restricted market access for competitors. Although limited fibre capacity was made available to other operators, it was not offered on equivalent terms, allegedly amounting to a further contravention of the Namibian Competition Act.

In South Africa, the Department of Trade, Industry and Competition published draft Regulations on Vertical Restraints in 2024, proposing a stricter enforcement framework targeting vertical restraints. Notably, the draft regulations include prohibitions on certain territorial restrictions, such as limiting active or passive sales within selective distribution networks and restricting passive sales to customers outside assigned territories or groups and indicate that such restrictions are likely to contravene the Competition Act. Although still in draft form and open for public consultation, these regulations mark a significant shift from the traditional approach, which generally tolerated such restrictions as a means of preventing free-riding, provided the firm imposing them did not hold a substantial market share or market power. The draft regulations suggest that the competition authorities now consider these restrictions unlikely to be justifiable for achieving the objectives of selective distribution or to protect brand quality.

This stronger regulatory stance reflects strong enforcement of vertical regulations as African competition authorities increasingly target vertical agreements that they consider hinder market access and competition.

Resale price maintenance, exclusive dealing, and territorial restrictions are now clear enforcement priorities. Firms operating within COMESA and other African markets should review and update their pricing and distribution arrangements, as necessary. It is crucial to seek legal advice before entering into or renewing agreements involving long-term exclusive supply, pricing controls, or territorial restrictions.

For further guidance on vertical arrangements, including risk assessments, compliance strategies and engagement with competition authorities, firms may contact Marianne Wagener, Head of Antitrust and Competition at Norton Rose Fulbright South Africa.

The full CCC settlement agreement can be found here.