ESTHER MSETEKA, Lusaka
THE Competition and Consumer Protection Commission (CCPC) has fined seven stock brokers three percent of their respective annual turnovers for engaging in an anti-competitive agreement that involved withdrawing bids and fixing prices for brokerage services.
The brokers involved include Equity Capital Resources Plc (ECR), Stock Brokers Zambia Limited (SBZ), Madison Assets Management Company Limited (MAMCO), African Alliance Securities Zambia Limited, Finance Securities Limited, Pangea Securities Limited and Intermarket Securities Zambia Limited.
Speaking at a recent media briefing, CCPC board of commissioners Kelvin Bwalya said the brokers participated in an open bid to provide brokerage services to National Pensions Scheme Authority (NAPSA), in a transaction by Government to sell 27 percent shareholding in the Zambia Consolidated Copper Mines-Investment Holdings (ZCCM-IH).
“After submitting their respective brokerage fees, NAPSA opted to transact at the lowest transaction fee quoted and offered business to all the stock brokers who were willing to transact at that fee. Scandalously, the stock brokers convened a closed-door meeting where they resolved to withdraw all the bids submitted earlier.
“This conduct by stock brokers to agree and withdraw bids was tantamount to collusion and has a negative effect on a developing stock market like the Lusaka Securities Exchange (LuSE) as this drives up the cost of acquiring shares, therefore undermining participation by our citizens in alternate investment instruments,” he said.
Mr Bwalya said the anti-competitive behaviour exhibited by the stock brokers threatened the income security of the funds’ members, who are vulnerable in society.
He said NAPSA, being a public pension fund, could have lost its monies through the cartel which in turn would have increased the cost of doing business for the pension fund.
The commission has concluded investigations into restrictive business practices by the stock brokers and the LuSE in setting brokerage commissions.