Law & Politics

The Application of Damage Without Legal Injury and the Effect of Anti-Trust Regulations in Nigeria

Introduction

This piece of legal exposition is essentially designed to consider the applicability of the principle of damnum sine injuria  as juxtaposed with anti-trust regulations and rules on the prohibition of anti-competitive practices in the Nigerian open market economy and the world over. It suffices to state that as at the time of writing, there is no “established” legal framework against anti-competition in Nigeria. However, there is the Competition and Consumer Protection Bill, 2018 currently before the National Assembly, as well as other enactments and regulations that prohibit (in some measure) anti-competitive activities in different spheres of social and commercial endeavour. This work is also intended to benchmark on international case law and common anti-trust practices in jurisdictions where there are more substantive and perceptible regulations on anti-competition. It seeks to do justice to a number of jurisprudential concerns- Are there any restrictions to the principle of damnum sine injuria?  Will the principle be affected by the rules on anti-trust? Will the court ignore a plaintiff’s claim on the grounds of “absence of legal injury” in all circumstances? For a proper understanding of this subject matter, it is important to examine the relevant concepts.

 

DAMNUM SINE INJURIA

It is basically a rendition of Latin vocabulary meaning “damage without injury”. It is a valid principle under the law of torts which presupposes that a damage however severe is not actionable unless a legal injury has been occasioned. Thus if a defendant’s act is in itself lawful, he cannot be sued in tort, however much damage the plaintiff may have suffered as a result of it. [1]

The principle of damnum sine injuria  is predicated upon the need for reasonable freedom for social and commercial activities to thrive as it would be absolutely intolerable if every kind of harm were to be treated as legally redressible.[2] Various harms do not attract any legal remedy for reasons which include; triviality of harm complained about(de minimus non curax lex), indefinity or incapability of proof. In other cases, such harm may have resulted from defendant’s exercise of his own rights or must have been necessitated by forces of circumstance. Hence, the exigence of the principle.

 

ANTITRUST/ANTICOMPETITION LAWS

They are regulations designed to promote and protect transparent and competitive markets from unjust and unfair business practices.[3] They are laws that promote or seek to maintain market competition by regulating anti-competitive conduct by business groups. Anti-trust law has different representations from one jurisdiction to another. It is referred to as “anti-monopoly law” in China and Russia, “trade practices law” in the UK and Australia(although in previous years). It is within the EU and US setups that it is referred to as anti-trust/anti-competition law(even more conventionally referred to as simply “antitrust”. The foregoing connotation will be occasionally employed in the course of this essay). Even so, the history of competition law reaches back to the Roman Empire . The business practices of market traders, guilds and governments have always been subject to scrutiny, and sometimes severe sanctions. Since the 20th century, competition law has become global. In modern times, it has evolved into an intra-national watchdog effort. They help to check unwholesome trade practices (which are a result of the “survival of the fittest” conception borne by many business proprietors and partners alike) which are collectively referred to as anti-trust acts. Anti-trust and anti-competition practices substantially stifle and inhibit healthy competition to the detriment of the consumer and the larger economy.[4] They include but are not limited to -market allocation, conspiratorial pricing between some competitors against the others, abuse of dominant market position and profile, price fixing, bid rigging, predatory pricing, oppressive monopolies, restrictive and exclusive contracts, hoarding, etc. The anti-trust doctrine is necessitated by the need to promote free trade and a healthy environment for small businesses to thrive. Anti-trust laws are essentially engineered towards better consumer satisfaction and the prevention of customer exploitation. There have been various debates as to the possibility of the anti-trust mechanism being employed as a calculated witch-hunt on big and industrious business and an encouragement for slothful enterprises who fail to level up with the challenge of business competition. Some industry watchers argue that competition laws can produce negative results, one of which is the protection of competitors who fall below industry standards. Yet some others argue that a particular company may dominate a certain industry because of the skill and “innovativeness” which it brings to the business.[5] However, this essay is more concerned with the legitimate intent, effect and application of antitrust regulations and how it can affect the principle of damnum sine injuria.

 

ANTITRUST LAW IN NIGERIA

It has earlier been stated in the introductory part of this work that there is no specific legislation in Nigeria against anti-trust/anti-competition. However, there is a bill before the National Assembly, the Competition and Consumer Protection Bill, 2018 which would be parsimoniously employed in this essay (considering the fact that it only has a “futuristic” effect on the subject), as well as a handful of other legislations that touch on the subject of anti-trust and expressly proscribe certain anti-trust activities. The Bill has its initial objective to be the “promotion and maintenance of competitive markets in Nigeria”.[6] S. 1(d):

 prohibits restrictive or unfair business practices which prevent, restrict or distort competition or constitute an abuse of dominant position of market power in Nigeria;

  1. 2 of the same Bill extends it’s application to all individuals, companies, groups, government parastatals and all other undertakings and commercial activities within Nigeria or having effect within Nigeria. By S. 59, “restrictive agreements” restricting or distorting competition are unlawful and can be subjects of litigation(as well as several other anti-competitive acts contained in the Bill). For capital market transactions, which are mainly publicly quoted and Government quoted securities, the Investment and Securities Act, 2007 has provisions which require the Securities and Exchange Commission (“SEC”) to prohibit market rigging and manipulation, insider rigging and all other forms of unfair and fraudulent trade practices in the Nigerian Stock Market. Where a business practice prevents or lessens competition, SEC is authorised to in the interest of the public, among other things, undertake a Court sanctioned break-up of the infringing company into separate entities, in such a way that its operations do not cause a substantial restraint on competition.[7] Also by S. 30(4)(I) of the Civil Aviation Act, 2006, the Nigerian Civil Aviation Authority(NCAA) is authorized to investigate any case of unfair or deceptive trade practices and acts against competition within the aviation setup in Nigeria. Ss. 25,26,32(1)(a) of the Electric Power Reform Act 2005 give room for pre and post-privatization competition. A plethora of other legislations that prevent anti-trust acts exist within the Nigerian legal framework which is an indication of the recognition of the anti-trust concept in Nigeria.

 

EXAMINING THE RELATIONSHIP BETWEEN THE TWO CONCEPTS

From all the foregoing explications, it is reasonably ostensible that the two concepts of “antitrust” and “damnum sine injuria” are substantially interrelated both in confluence and in divergence. The questions that arise in examining these concepts together are – Will a company be allowed to perform anti-trust/anti-competitive acts under the envelope of damnum sine injuria? Will the rule on anti-trust draw a line to the applicability of damnum sine injuria or will the latter be defeated by the former in entirety? It is important to resort to relevant case law and conventional practice to find a remedy to this jurisprudential predicament.

 

THE CASE OF MOGUL STEAMSHIP CO. LTD. V. MCGREGOR, GOW & CO[8](McGregor’s case).

The case of Mogul Steamship Co. Ltd. V. McGregor, Gow & co is an English case concerning the tort of conspiracy to cause injury to economic interest. It bothered on the legitimacy of an agreement made by an association of other steamship companies(defendants), to reduce the cost of freight on their cargo ships causing the plaintiff to run at a loss. They also threatened to dismiss any agent who agreed to load the plaintiff’s ship. The plaintiff’s action was dismissed by the court on the basis of damnum sine injuria.[9] The English CA per Bowen LJ and Fry LJ held that the acts of the defendants were lawful market practices and that there had been no legally redressible injury. At the apex court, the judgement of the lower courts were upheld. It suffices to borrow the dictum of Lord Bramswell in McGregor’s case above where he stated thus:

I think upon the authority of Hilton v. Eckersley[10] , and other cases, we should hold that the agreement was illegal, that is, not enforceable by law. I will assume, then, that it was, though I am not quite sure. But that is not enough for the plaintiffs. To maintain their action on this ground they must make out that it was an offence, a crime, a misdemeanor. I am clearly of opinion it was not.

It is apparent from the dictum of the learned judge that he indirectly concedes to the impropriety of the act. Nevertheless, he is insistent on the fact that plaintiffs in such circumstances are saddled with the burden of proving that such an act amounts to a legally enforceable offence, crime or misdemeanor. Incapability of proving legal injury in such cases appears to be the major challenge. If the forgoing judicial opinion is to go by, it is ostensible that the ratio for the decision in McGregor’s case was the fact that such agreements were not prohibited as at that time. At the time, the court adhered to a laizzes faire doctrine preventing much institutional, government or legal interference with the ongoings of the business world. It allowed companies to form cartels with the intention of knocking competitors out of market. This practice was enveloped under the umbrella of “fair competition”. Note however that the practice has now been abolished under the English Competition Act, 1998 in the face of rising clamour for anti-trust regulations. Such agreement to deprive the plaintiff, Mogul Steamship Co. Ltd. from market share would amount to a “restrictive agreement” in modern jurisprudence. Hence, the aforementioned case should no longer serve as a ready shield against prosecution from anti-trust/anti-competitive acts at any level of business especially as it relates to the Nigerian arrangement. Anti-trust legislations even now appear to be a walk in the realms of injuria sine damno which portends that some acts can be actionable per se (i.e. without proof of damage to the plaintiff). Hence, once it is established that an act is anti-competitive within the catering of the relevant law, the claws of the law will strike. This is a direct result of the fact that anti-trust regulations are essentially for the eventual benefit of consumers and the larger economy which calls for great legal concern. The rule of anti-trust is therefore an ameliorative effort on the principle of damnum sine injuria (with specific regards to competition) rather than an outright opposition.

 

MICROSOFT’S CASE

The case of Microsoft Corp. V. Commission is one of anti-trust brought before the European Union by the European Commission for abuse of dominant market position by Microsoft. A complaint was brought before the European Commission by Sun Microsystems in 1998 accusing Microsoft of integrating “streaming media” technologies into Windows NT. The complaint was accordingly investigated and Microsoft was found to be guilty of undisclosed interoperability of Windows NT which was contrary to competition law and consequently fined. More recently, on the 18th of July 2018, Alphabet’s owned Google was hit with a record fine of $5billion for abusing the dominance of its Android mobile operating system. It was found to have been forcing smart phone makers to pre-install Google apps- Chrome, Search, Play Store etc. and even entering into agreements for payment of phone makers for the prevention of sale of devices running on alternative versions of Android not approved by Google(so called “Android forks”) since 2011.[11] The forgoing acts amount to “restrictive agreements” against competition which is directly related to the circumstances of McGregor’s case.  It becomes apt to re-echo that every case is dealt on the basis of its own peculiarities. The principle of damnum sine injuria as it relates to competition cannot be applied as a general leverage for the perpetuation of anti-trust acts or an evasion from the prosecution of same as many ministers of the law apply it. The case of McGregor undoubtedly was determined based on the predominant rule system of the time which made no prohibitions from anti-competitive acts of that nature. The system of things has been altered to cater for the prevention of unwarranted business tension and exploitation of consumers. Hence, the emergence of anti-trust regulations in different civilizations. The case of McGregor would have benefited from the same fate that befell Microsoft and Google if it were determined in more recent times.

 

CONCLUSION

Having considered all the foregoing states of legal affairs, it becomes a safe conclusion to state concerning the effect of anti-trust regulations on damnum sine injuria  that the former is basically an amendment to the latter in respect of competition. The courts are enjoined to pay close attention to the the legality or otherwise of such acts which result in the displacement of competitors. It is important for a line to be drawn between “fair competition” and “anti-trust”. Acts which could range from improvement of product standard and better service delivery, boosting the profile and customer base of Company A will not amount to anti-trust if Company B is knocked off market. What is paramount is that customers do not run at a risk of exploitation by dubious companies. Anti-trust regulations are designed to encourage fair competition which is the very core of business rather than to attack it. However, the enforceability of the laws against anti-trust in Nigeria becomes yet another issue of great concern. Not many are aware of the existence and functionality of such regulations as a tool to prevent unhealthy business practices. The government is indulged to put effect to the Competition Bill and ensure that it is effectively employed to cater for anti-trust in Nigeria.

 

 

References

[1] Kodilinye and Aluko, “The Nigerian Law of Torts”. p.5

[2] Ibid

[3] “Anti-trust and Completion Laws and Regulations”,http://www.oseroghoassociates.com/articles/185-legal-alert-october-2015-antitrust-and-competition-laws-and-regulations

[4] Ibid

[5] T. Osinowo, “Competition Law in Nigeria” http://www.vitaveritasllp.com/competition-law-in-nigeria/

[6] s.1(a)

[7] Ibid at 3

[8] (1892) AC 25

[9] The case of Elem v Moku (3PLR/1957/26 SC) appears to have taken a radically different opinion on damnum sine injuria.

[10] (6 Ellis and Blackburn Q.B  1885)

[11] http://europa.eu/rapid/press-release_IP-18-4581_en.htm

 

Author: Fortune Ihator

 

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