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Official Journal I SERIES – NR, 58 LAW Nº 17/03 OF 25th July LAW ON TAXES AND CUSTOMS INCENTIVES FOR PRIVATE INVESTMENT
The existence of a General Taxation Law is now standard in many States, representing an instrument to rationalize, structure and stabilize taxation systems. In fact, when creating a legal framework attractive to private investment, there has to be, along with concerted economic and social policy instruments, an incentives and tax benefits policy. The incentives and tax benefits to be granted within the framework of this Law constitute an exceptional tax advantage, and when it is approved, the Tax Benefits Code in it, ought to be incorporated in homage to a seamless harmonization of all substantive and procedural tax legislation. The incentives and tax benefits defined in this Law bear in mind the priorities of reconstruction and development and come within a framework of an integrated policy, where productive investment (agriculture and industry) and human capital (health and education) and in roadway, railway, seaport, airport, telecommunications, energy and water infrastructure, are prioritized. In these terms, and within the framework of the combined stipulations of paragraph f) of article 90, and of Nº 4 of article 92, both of the Constitutional Law, the National Assembly hereby approves the following:
LAW ON INCENTIVES & TAX BENEFITS FOR PRIVATE INVESTMENT Article 1. Scope of Application This law regulates the procedures, types and modalities for the granting of incentives and tax benefits within the framework of the law on private investment in Angola.
Article 2. Classification Criteria Incentives and tax benefits are classified, in agreement with three fundamental criteria: a) Sector of activity;
b) Development zones;
c) Special economic zones.
Article 3. Objectives The granting of incentives and tax benefits for investment projects, under the terms of the following articles, is aimed at the realization of the following objectives: a) Production of goods of first necessity earmarked for the internal market to satisfy the population’s basic necessities;
b) Prioritized development of under-developed regions, namely those exhibiting high levels of poverty and ongoing unemployment or that do not have infrastructures, or whose infrastructures have been destroyed or need upgrading;
c) Revamping, implantation or upgrade of infrastructures earmarked for production operations or provision of services;
d) Improvement of productive capacity or provision of services set up in the country;
e) Industrial diversification and promotion of the export of manufactured products;
f) Technological innovation on the level of the production of goods or provision of services and scientific development, when translating to an increase in efficiency, quality of goods and services and productivity;
g) Increase in productivity of business units;
h) Creation of jobs for national workers;
i) Professional training or enhancement of the professional qualification of entrepreneurs and national workers;
j) Fostering of association between both national and foreign entrepreneurs in different ways;
k) Increase and diversification in exports;
l) Increase of incorporation of national raw materials and the value-added of goods produced locally;
m) Progressive reduction and substitution of imports, namely in sectors of economic activity considered strategic or that, by their very nature, dimension, location or tradition, are of particular importance to the national, regional or local economy;
n) Increase in foreign currency flowing in and corresponding improvement in balance-of-payments situation.
Article 4. Priority Sectors Those sectors considered as priority ones, for the purposes of this law, are the following: a) Agri-livestock production;
b) Manufacturing Industries, whose final product incorporates at least 25% of national raw materials and materials, or 30% of value-added, or whose equipment and production process bring about technological advancement and the upgrade of respective industry, (namely, sectors of Agri-industry, Manufacture of composts and fertilizers and foodstuffs industry, Textiles and clothing manufacture, Exploration and manufacture of lumber, Woodwork and furniture, Construction materials, Manufacture of packaging. Metallurgy and heavy engineering, Manufacture of machinery and equipment, tools and accessories, Cellulose and paper-pulp industry, Manufacture of tires and inner tubes, Milling of maize, cassava and wheat, Milk and dairy products, Artifacts and fishing, Husking and roasting of coffee, Manufacture of footwear, Industries for the manufacture of mineral products, IT and telecommunications equipment);
c) Fishing industry and byproducts;
d) Civil Construction;
e) Health & Education;
f) Roadway, Railway, Seaport & Airport Infrastructure, Telecommunications, Energy and Water;
g) Heavy-duty equipment for loading and passengers.
Article 5. Development Zones For the purposes of granting incentives and tax benefits for investment operations, the country is organized into the following development zones: Zone A - covers the province of Luanda and the chief municipalities of the provinces of Benguela, Huíla and Cabinda
Zone B – the other municipalities of the provinces of Benguela, Cabinda and Huíla and provinces of Kwanza Sul, Bengo, Uíge, Kwanza Norte, Lunda Norte, Lunda Sul and Zaire Zone C – the provinces of Huambo, Bié, Moxico, Kuando-Kubango, Cunene, Namibe and Malange.
Article 6. Criteria for Granting Incentives 1. The granting of incentives is assigned in relation to: a) The placing of investment projects in sectors classified as priority ones; b) The contribution of an investment project for development zones B and C.
2. The criteria of appreciation referred to in the previous number are not cumulative, merely constituting a simple indicator of reference for the regional or local economy.
Article 7. Requirements Taxpayers wishing to take advantage of incentives and tax benefits, must cumulatively fulfill the following requirements: a) Must have the legal and tax conditions for the exercise of their activity duly in order;
b) Not be a debtor in relation to the State, Social Security, and not be in arrears in relation to the financial system;
c) Have an organized accounting system that is adequate to the demands of assessing and monitoring the investment project.
Article 8. Customs Duties 1. Investment operations are exempt, for the period to be established under the terms of the following number, from the payment of duties and any other customs tariffs, with the exception of stamp duty and charges due for provision of services, on capital goods for the start-up and development of an investment operation, including heavy vehicles and technologies.
2. The period of exemption referred to in the previous number will be of 3 years in the case of investments realized in Zone A, and of 4 and 6 years respectively, when an investment is realized in Zones B and C.
3. When used equipment is to be imported, the exemption established in number 1 is substituted, for the period of time provided for in Nº 2, by a reduction of 50%.
4. Investments are also exempt from the payment of duties and any other customs tariffs, with the exception of stamp duty and charges due for provision of services, on goods that were incorporated or consumed directly in the production of other goods, for a period of 5 years as of the start-up of operations, including tests.
5. The incentives established in the previous numbers will not be granted when the capital goods, accessories and spare parts, and raw materials are produced in national territory.
Article 9. Industrial Tax 1. Profits arising out of investments, are exempt from the payment of industrial tax, for a period of 8 years, when realized in Zone A, for a period of 12 years, when realized in Zone B, or 15 years, when realized in Zone C. 2. In Zone C and for the same period, equally exempt from the payment of industrial tax due on the price of a contract, the sub-contractors engaged to execute the investment project. 3. The period of exemption is counted as of the start-up of operations of the facility.
Article 10. Expenses Considered as Losses The following expenses in relation to the investment operations provided for in this law, can, beyond the periods of exemption established under the terms of the previous article, be considered as losses, for the purposes of assessing taxable amounts: a) Up to 100% of all expenses realized with the construction and repair of roads, railways, telecommunications, water supply and social infrastructure for workers, their families and population in these areas;
b) Up to 100% of all expenses realized with professional training in all spheres of social and productive activity;
c) Up to 100% of all expenses resulting from investment in the cultural sector and/or purchase of works of art produced by Angolan authors or creators, provided that, when classified, they remain in the country and are not sold for a period of 10 years.
Article 11. Capital Gains Tax 1. Companies promoting the investment operations covered by this law, are exempt from the payment of capital gains tax, for the period of time stipulated in number 2 of this article, in relation to profits allocated to shareholders.
2. The exemption provided for in the previous number shall be granted for a period of up to 5 years, in relation to investments realized in Zone A and of up to 10 and 15, in the case of investments realized in Zones B and C, respectively.
Article 12. Real Estate Tax Companies promoting the investment operations covered by this Law, are exempt from the payment of real estate tax on the acquisition of land and buildings pertaining to a project, and for which purpose they should apply for it at the appropriate tax department.
Article 13. Other Investments Investments whose value is equal to or more than US$50,000 and lower than or equal to US$250,000, while taking into account their nature, location and importance for the regional or local economy, can benefit from the following tax incentives:
1.
Rate
lowered to half for duties and any other customs tariffs, with exception
of stamp duty and charges due for services provided, on capital goods
imported for construction, supply, and equipment, including vehicles of
more than three and a half metric tons (3.5 tonnes) of gross weight and
raw materials, namely: a) Investments in new enterprises, with a positive impact on the region and that also include construction and/or revamping of economic or social infrastructure;
b) Investments for expansion, revamping or upgrade of commercial or industrial facilities, especially those destroyed by war;
c) Investments in priority sectors and/or in Zone C;
d) Investments guaranteeing the creation of more than 10 exclusively dedicated jobs for national workers.
2. When already-used equipment is to be imported, the rate referred to in number 1 shall be lowered by 75%. 3. The incentives established in the previous number will only be granted when the equipment, accessories and spare parts to be imported are not produced in national territory or, when so produced, they certifiably do not fulfill the requirements inherent to the nature of the project to be put in place. 4. Exempt from payment of industrial tax, for a period of up to 10 years, are:
a) Investments in new enterprises and the revamping of destroyed or paralyzed enterprises, provided that they are realized in priority areas (Zone C);
b) Investments in the areas of agriculture, livestock and foodstuffs industry;
c) Investments creating 50 or more exclusively dedicated jobs for national citizens.
5. Exempt from the payment of industrial tax, for a period of up to 5 years are: a) Investments in new enterprises, the revamping, enlarging, or upgrading of paralyzed enterprises, realized in Zones A and B;
b) Investments in sectors of light industry, housing, provision of specialized services, technological development;
c) Investments creating 30 or more exclusively dedicated jobs for national citizens.
6. Exempt from payment of capital gains tax, are those profits allocated to the shareholders of companies that make investments: a) In the provinces of Zones a and b, for a period of up to 5 years;
b) In the provinces of Zone c for a period of up to 10 years.
Article 14. Medium & Long Haul Transportation 1. Exempt from the payment of customs duties is the importation of new resources, by individual or corporate persons, operating in the medium and long haul transportation of cargo or passengers by means of coastal shipping and vehicles of more than three and a half metric tons (3.5 tonnes) of gross weight.
2. When the exemption concerns used resources, up to three (3) years, the applicable rate is lowered by 50%.
Article 15. Private Education Establishments & Clinics1. The income from private education establishments integrated in the national educational system, as well as clinics integrated into the national health system, is subject to income tax at the rate of 20%. 2. The rate established in the previous number shall be lowered to 10% whenever the educational establishment and private clinics freely offer 10% of their capacity to students coming from underprivileged backgrounds, under terms that will be eventually regulated
Article 16. Special Economic Zones Incentives for the investments to be realized in the special economic zones will be defined in a specific law.
Article 17. Legal Obligations 1. Entitlement to standard-type tax incentives, resulting directly and immediately from law, neither releases the taxpayer from the General Taxpayers Register nor from compliance with any other legal obligations and formalities prescribed by the tax administration, with a view to proving their entitlement to the incentive. 2. Exercising entitlement to any of the standard-type tax incentives provided for in this law, takes place when tax obligations have been met, by showing verification of the presuppositions established for the incentive in question.
Article 18. Recognition of Incentives & Tax Benefits Incentives and tax benefits are automatic, resulting directly and immediately from the law.
Prior Consultation 1. Before verifying the presuppositions of the tax incentives provided for in the law, or even before start-up of the project, interested parties can ask the Investment Promotion Agency to officially pronounce on a given taxation situation not yet realized.
2. The official reply made to a formal request, submitted under the terms of the previous number, shall be communicated to the interested party, and be binding on the services, which, once the facts provided for in law have been verified, cannot proceed differently, save in compliance with a court decision.
3. Recourse cannot be had to lodging a complaint or appeal in respect of the official reply referred to in the previous number and does not release the interested parties from requesting recognition of the respective tax benefit, under the terms of the law. 4. Once a request for recognition has been submitted, and has been preceded by a prior consultation, this shall be attached to the interested party’s formal request. The entity authorized to grant recognition must conform with the previous official reply, insofar as the hypothetical situation that is the subject of the prior consultation coincides with the de facto situation that is the subject of the request for recognition, without prejudice to measures of control for the tax benefit demanded by law.
Article 20. Delivery of Processes Copies of all processes approved must be sent to the Ministry of Finance, by way of the National Departments of Customs and of Taxes.
Article 21. Inspection Individual or corporate persons, public or private, that are granted incentives and tax benefits, whether automatic or dependent on recognition, are subject to inspection by the Investment Promotion Agency and of any other official entities, under the terms of the law, in order to check observance of the presuppositions on which the granting of incentives and tax benefits depends and of compliance with obligations imposed on taxpayers benefiting from them.
Article 22. Sanctions Sanctions to impede, suspend or extinguish incentives and tax benefits are only permitted on the grounds of tax-related infringements in respect of the benefits granted.
Extinction of Incentives & Tax Benefits 1. Incentives and tax benefits are extinguished by: a) termination of the period for which they have been granted, when temporary ones; b) verification of the presuppositions of the respective condition resolving them, when so conditioned; c) revocation, in case of non-fulfillment, by virtue of a fact attributable to the taxpayer, of their legal or contractual obligations.
2. The extinction of incentives and tax benefits automatically leads to the general taxation system being reinstated .
3. When incentives and tax benefits involve the acquisition of goods earmarked for investment operations, the respective concession will be invalidated if these goods are divested or given some other destiny without authorization of the National Private Investment Agency (ANIP), without prejudice to any other sanctions or consequences established in law.
Article 24. Assignment of Incentives & Tax Benefits
1. Entitlement to incentives and tax benefits is assignable, through prior authorization of the Minister of Finance, with the National Private Investment Agency (ANIP) having been heard, provided that the presuppositions on which their concession is based and the obligations arising out of the investment project are maintained, with the proponent having to be notified within eight (8) days following reception of a petition.
Article 25. Transitory System 1. Incentives and tax benefits granted before this law’s enactment are subject to that stipulated in prevailing legislation at the date of their concession. 2. The stipulation in the previous number is equally applicable to incentives and tax benefits that have been requested before this law’s enactment and whose decision is to be proffered following that date. 3. Investments realized between January 1 and December 31, 2002 can be granted the incentives and tax benefits provided for in this law, provided that by decision of the Investment Promotion Agency, they are considered relevant for national, regional or local economic development, promote the creation of jobs and fulfill any other prerequisites provided for in this law. 4. For the purposes of that stipulated in number 3 of this article, investors must apply for, up to 60 days following the date of this law’s enactment, the granting of these incentives and tax benefits. 5. Benefits granted within the framework of that stipulated in the previous number are not cumulative with any others.
Article 26. Doubts & Omissions Any doubts and omissions arising out of the interpretation and application of this law, are resolved by the National Assembly.
Article 27. Repeal All legislation contrary to that stipulated in this law, namely, Decree Nº 73/97, of October 24, 1997 is hereby repealed.
Article 28. Enactment This law comes into force on the date of its publication. Seen and approved by the National Assembly, in Luanda, The Speaker of the National Assembly, Roberto António Víctor Francisco de Almeida The President of the Republic, José Eduardo dos Santos.
REPORT ON TAX INCENTIVES LAW Explanatory Note 1- Rationale and prior theoretical justification 1.1 Antitrust law can be characterized as part of the legal system, focused on setting standards applicable to the exercise of economic activity. This is done by means of rules and regulations governing the setting-up of companies, marketing of products, competitive relations, and consumer protection-rights. Therefore, it addresses standards aimed at protecting the market against restrictive competition practices. These can be attributed either to the individual conduct of entrepreneurs, or the concerted conduct of groups of companies, irrespective of their legal form, or to the abusive exercise of a dominant position on the part of a company or companies with a leading place on the market, as well as the control of concentration operations. 1.2. The creation of a legal environment for private investment in Angola requires, needs be, a set of legal instruments to be drawn up to protect fair competition insofar as, on the one hand, it undeniably constitutes one of the priority sectors of national economic policy. And, if the plan is to strengthen the principles underpinning a free market economy, there are no doubts as to the fact that competition needs to be one of them. On the other hand, antitrust laws promote the selection of the most apt, management of resources for more rational applications, lower costs and prices to the consumers’ benefit, as well as contributing to improving productivity and the diversification of products. And all this aside from conditions enabling fair and equal opportunities. 1.3. In legislating for antitrust purposes, we are immediately confronted with two prior issues: The first concerns the system to be adopted. On the one hand, we have systems favoring a structural notion of competition, viewing this as a good thing per se, and then establishing a general prohibition. What is at issue here is a potential damage and not the notion of effective damage. On the other hand, we have the system that does not abstractly combat agreements, concentrations and other actions limiting competition, but only represses them when they prove contrary to the general interest. In which case, agreements producing adverse effects on competition should be declared illicit. Here, the notion of effective damage is the guideline, not that of potential damage. 1.3.1. Of the two systems described, the draft bill of the Antitrust Law opted for the first. That is to say, for general prohibition and the safeguarding of potential damages to competition. 1.3.2 The second, and most problematic, issue, concerns the following: Should a single law address the legal discipline of antitrust principles and, at the same time, unfair competition or unfair trading practices? In truth, while the first is aimed at organizing markets and using them to protect consumers and producers, the second – unfair practices– is aimed at the protection of specific economic agents, demanding of competitors a standard of fairness in competition. In this case, it only addresses the prevention of cases in which the economic conduct of entrepreneurs goes against conventional rules of ethics. In other words, the repression of all actions or omissions not conforming to principles of honesty and good faith in commerce, liable to cause loss to a competitor by the total or partial usurping of its clientele.
1.3.2.1. The draft bill opted to include, in a single law, antitrust standards from a technical standpoint and standards on individual practices or, as the epigraph of the part concerned says, “of illegal business practices”. However, one must bear in mind that article 73 of Law Nº 3/92, of February 28,1992 on industrial priority [sic][1], deals with unfair competition practices. Therefore, taking into account that this law is in the packet of economic legislation to be reviewed, it would meanwhile appear to be expedient that the new Antitrust Law repeals that article.
2. Summary of contents 2.1 Technical rules governing competition The matter of rules governing competition from a technical standpoint is addressed in articles 3 to 11, which regulate agreements, concerted practices, decisions of association, abuse of a dominant position, and abuse of economic dependence, as well as concentrations. In article 1, the law reaffirms the principle of the territoriality of effects. Or, in other words, repression only to be applied when it concerns conduct that can or does make its effects felt in Angola. Along the same lines, the principle of its application to all sectors of activity - private, public and cooperative, is defined. Only in article 12 does it provide for companies that, by way of a special law, have been entrusted by the state to manage a public service, to be subjected to the rules established in this law. And then only insofar as the application of these rules does not constitute an obstacle, in law or de facto, to the exercise of the mission that has been entrusted to them. On the other hand, article 9, Nº5 excludes the application of the concentration system to credit institutions, financial firms and insurance companies. Primarily, we feel that the financial sector needs to undergo profound transformations in the face of competition from major foreign groups
2.2 Forbidden practices With regard to practices forbidden vis-à-vis companies, we come across agreements, concerted practices and decisions of association (irrespective of the form they take), abuse of a dominant position, and abuse of a situation of economic dependence. With regard to agreements, concerted practices and decisions of association (article 3), it involves a standard aimed at preventing certain concerted actions, within national territory, that are liable to harm fair competition. The presumption of the application of this article is based on the existence of an agreement between companies, or decision of association, or a concerted practice, aimed at restricting, thwarting or manipulating competition in all or in part of the national marketplace. It should be noted that the parties involved in a forbidden practice can be operating in the same or in different circumstances of economic activity and that, in relation to this situation, we may have a horizontal agreement or a vertical agreement. Concerted practices do not rest on an agreement generating obligations, with situations occurring in which there is parallel conduct in the same direction by various entrepreneurs. For example, conduct which can lead to the structuring of a price that would not otherwise have resulted from the functioning of a competitive market. The object of an agreement, decision or concerted practice must be one that thwarts or manipulates competition. An objective that can be achieved in a variety of ways, of which article 3 exemplifies the following: a) Fix, either directly or indirectly, buying or selling prices or interfere in their determination by the free working of the market, setting them either artificially high or low; b) Fix, either directly or indirectly, other transaction conditions effected in the same or different state of economic process; c) Limit or control production, distribution, technical development, or investments; d) Carve up markets or sources of supply; e) Apply, systematically or occasionally, discriminatory conditions to prices or others in relation to equivalent offers; f) Refuse, either directly or indirectly, the purchase or sale of goods and the provision of services; g) Bind the signing of agreements to the acceptance of additional obligations that, due to their nature, or because of their trading practices, do not have any connection with the object of these agreements.
2.3. The draft also prohibits the abuse of a dominant position, but with some special conditions, as highlighted below. The first aspect to be highlighted is, what is at stake here, ie, the “national market” or a “substantial part of it”, (article 6, Nº1), but which precisely concerns, as shown in Nº2 of the same article, the marketing of a certain type of goods or service. It then becomes important to determine what must be considered relevant for the application of this article. Hence, the market includes all products or services considered by the consumer, due to their characteristics, price or utilization envisaged, as being fairly interchangeable. It must be noted that it does not mean the dominant-position situation is prohibited, but only the abusive employment of it, when this translates to manipulating competition. Examples of a dominant position correspond to situations of imperfect monopoly and oligopoly in which volumetric parallel conduct exists and is dictated by the interests of each of the agents. Lacking the possibility of strictly defining the dominant-position concept, what the legislator does is to establish a set of presumptions that can be refuted, but with the burden of proof being reversed. It is presumed, therefore, that a company holds a dominant position when it retains more than 30% of the market share (article 6, Nº4) of goods or services on the national market.
2.4. Under the terms of article 7,“it is also forbidden for one, or more companies, to abusively exploit a situation of economic dependence in which it is advantageously placed in relation to any supplier or customer not having an equivalent alternative available, namely when this translates to the adoption of any conduct provided for in Nº2 of article 7.
2.5. The economic-balance principle, which is expressly enshrined in article 4, is more a demonstration that certain conduct, even though it clearly breaches competition, can be accepted insofar as it generates effects considered positive in the economic sphere. Article 4, therefore, provides for the fact that restrictive competition practices can be considered justified when they contribute to improved production or distribution of goods and services, or promote economic or technical development, provided that they cumulatively fulfill the following positive and negative conditions: - Reserve an equitable part for users of any benefit resulting from restrictive competition practices; - Do not impose restrictions eliminating competition on a substantial part of the market.
2.6. In light of the impact caused by minimizing the repression of unfair competition practices, the importance of enshrining the principle of economic balance in antitrust legislation is of such significance that it calls for each of these prerequisites to be looked at more closely. In the first place, we have to underscore the fact that improvements in production or distribution can only be assessed by comparing a situation resulting, or that will presumably result, from an agreement, with what would exist in its absence, vis-à-vis the notion of rationalization or specialization. As far as technical or economic development is concerned, it addresses the fairly wide and progressive notion that it would occur in line with the framework of which it is part, as well as being in harmony with economic circumstances and economic policy. The notion of reserving an equitable part of benefits for the users of goods and services, means that the interested parties should benefit through lower prices, greater facility in procurement, safety and added comfort, quality-assurance of products, possibility of presentation of more complete ranges of products, development of more efficient products and their easier application, or increased freedom of choice.
2.7. A particularly significant aspect of antitrust law is that regarding the circumstances of companies that can obtain, under the terms of article 26, a prior assessment from the Competition Board on the legality of conduct or its acceptability in light of the economic-balance principle.
2.8. Concentrations In article 8, the draft created an operational concept of concentration, covering situations that could not be considered as such from a legal viewpoint, but which, from an economic one, produce the same effects. Therefore, under the terms of Nº1 of article 8, it is taken that there is a concentration of companies: a) In the case of a merger of two or more previously independent companies; b) In the case of one or more persons controlling at least one company, or in the case of one or more companies acquiring direct or indirect control of a group or of stakes in one company or various companies; c) In the case of two or more companies incorporating into a joint company, provided that this corresponds to an economic entity of an ongoing nature, and not for the object or purpose of coordinating competitive conduct between the founding companies, or between the latter and the joint company. For its part, Nº2 of the same article stipulates that for the purposes of the previous number, control arises out of any act, irrespective of the form it takes, which involves the possibility of exercising a decisive influence on the activity of a company. While that of Nº3 excludes the sphere of concentrations in cases of the acquisition of stakes in the recovery process of companies and settlement of credit commitments. The draft does not enshrine a general rule prohibiting concentrations, only subjecting some of these operations to a prior notification system (article 9). In order to activate a need to notify, it is necessary that operations fulfill two conditions: a) Creation or bolstering of a share of more than 30% on the national market of certain goods or services, or of a substantial part of this in consequence of a concentration operation. b) Realization, by the group of companies involved in a concentration operation, of a business turnover of more than 30 billion escudos in Portugal during the past year. Prior notification must be made before any legal business deals have been concluded that will consubstantiate them (article 9, Nº2) and, up until the obtaining of their authorization, business deals signed with the intention of their fulfillment are invalidated (article 9, Nº4). In article 10, the following criteria are defined for assessing the market share of companies involved in a concentration operation. Concentrations must be refused whenever they “create a dominant position on the national market of a specific type of goods or service, or a substantial part of it, liable to thwart, manipulate, or restrict competition”. In Nº 2 of the same article, the draft (article 11, Nº3) permits, however, that even these particular operations of concentration can be realized, provided that they meet the conditions for the application of the economic-balance principle.
2.9. State Support State intervention in the functioning of markets, and the possibility of that producing ways of manipulating or restricting competition, has been a motive of concern in all antitrust legislation. It cannot ignore, however, the existence of constitutional devices that entail such support. The issue arises not only in relation to the treatment that the State affords its own companies but also, in a broader form, all entrepreneurs. The draft approaches the matter in cautious terms, to the extent that it proclaims, in article 13, Nº1, a principle that “in support granted to companies by the State or any other public entity it cannot restrict or affect in any substantial way competition on all or part of the market”. But it adds the exception, in Nº3 of the same article, to compensatory indemnities connected to the provision of public services and other benefits integrated in programs of incentives or other specific schemes approved by the Government or Parliament.
2.10. Antitrust Bodies Under the terms of the draft, the antitrust bodies are the Office of Prices & Competition, the Economic Activities Bureau of Investigation and the National Competition Board.
2.10.1. More important, however, is the position of the Competition Board, which constitutes a figure closer to that normally found enshrined in different legal regulations. The Board is usually considered as an independent administrative authority. The draft, in fact, limits itself to providing for the composition of the Board, at the same time that it defines a remuneration scheme incompatible with the exercise of functions in exclusivity. Also added to this is a process for the designation of members (article 21). The Board is empowered to impose fines and take decisions on processes with regard to restrictive competition practices, but is limited, in the matter of concentrations subject to notifications, to the formulation of opinions for the minister who has the power of decision.
2.11. The Process The draft likewise regulates procedural and sanctionary aspects in the matter of practices contrary to fair competition. Decisions on the process are incumbent on the Competition Board (article 33), which may: a) Order a process to be filed; b) Declare the existence of a restrictive competition practice and, should this be the case, order the offender to take the steps needed to cease such practice. c) Impose fines. A Board decision can be appealed in an ordinary court.
2.12. Unfair Trading Practices On the subject of individual practices, it should be underscored that the position not defending its being withdrawn from the framework on the issue of competition in a strict sense, prevailed, with it coming closer to that of anti-economic crimes. Indeed, it is sometimes considered that these practices do not affect the market as a whole, corresponding to a domain closer to that of compliance with ethical obligations.
This matter is addressed in part III Three individual practices are provided for and typified in Angolan law. a) The application of discriminatory prices or conditions of sale in relation to equivalent offers; b) Selling at a loss; c) Abusive business practices.
2.13. It is important to study, in the first place, the application of discriminatory prices or conditions of sale. The principle of equal conditions for equivalent offers is fundamental. Whoever purchases the same quantities in transactions with identical characteristics must benefit from the same prices and same conditions of sale. Discrimination is present whenever a supplier grants certain customers the advantages of special prices and conditions of sale, different lead-times for delivery, transportation and payment, when these are not extended to every customer (article 15). Naturally, the major difficulty consists in determining when offers are equivalent. Article 15, Nº6 considers that “equivalent offers are those that involve similar goods or services and that do not substantially differ in essential trading characteristics, namely those that have an impact on corresponding production or marketing costs”. On the one hand, offers of objects of no commercial value are not considered discriminatory. And it is considered that for offers where there has been an ongoing change in prices or conditions of sale practiced by the supplier between their dates of conclusion, then they are not equivalent, (article 15, Nºs 7 & 8). It addresses a standard whose aim is to guarantee equal possibilities with regard to procurement on the part of various entrepreneurs, preventing prices being applied subjectively, without taking into account the services provided to the supplier. It also ensures those conditions necessary to the development of alternative commercial channels that are more dynamic and efficient in substituting inefficient circuits. In order to guarantee the prohibition of discriminatory conditions, article 15, Nº1, obligates producers, manufacturers, importers, packagers and wholesalers of goods and the providers of services to have price lists and provide them whenever called upon to do so.
2.14 Prohibition of selling at a loss This is the second prohibited individual conduct (article 17). Excepted from this prohibition, however, are the following goods set out in Nº 3 of article 17. - Perishable goods, as of the moment at which they are threatened with rapid deterioration; - Goods whose commercial value is generated, namely as a result of technological innovations; - Goods whose re-supply is effected at a lower price; - Goods whose price is in line with the price practiced for the same goods by an economic agent that is an actual competitor; - Goods sold in sales or liquidations.
2.15 Abusive business practices have also been provided for as being, prices, conditions of payment, types of sale or of conditions of commercial cooperation that confer on the consumer a disproportionate benefit in relation to the quid pro quos offered.
3. Necessity of form proposed The approval of a legal antitrust instrument must be formalized by means of a law in the formal sense under the terms of paragraph b) of article 88 of the Constitutional Law, when it says that it is incumbent on the National Assembly “to approve laws on all matters, save those reserved by the Government’s Constitutional Law”.
4. Financial and human resources involved in executing the Law Lacking the possibility of proceeding with an economic analysis of the law to be created, it is expedient to include the execution of the Law within the framework of restructuring the area of prices of the ministries of Finance, Trade and of the Economic Investigation Bureau, enabling the National Competition Board to start functioning, and freeing-up human resources currently belonging to those areas of activity. This will enable personnel for the National Competition Board to be recruited from the universe of professionals working in the private sector, which would not mean a significant increase in headcount.
5. Legislation to be repealed With the approval of the Antitrust Law, article 73 of Law Nº3/92, of February 28, 1992, on industrial property ought to be repealed. This repeal is fundamental in opting, for the time being, to include competition in a technical sense, as well as unfair competition or unfair trading practices, in a single law. [1] Translator note: Probably typo for “property” in original, please see further reference to this law in paragraph 5.
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