EAC to set up authority to push for free, fair trade

Zanaa, which makes leather products, at a Comesa SME exhibition in Kampala in 2012. The regional competitions authority will offer SMEs a level playing field. PHOTO | FILE 

By CHRISTABEL LIGAMI, TEA Special Correspondent

In Summary

• A total of $701,530 has been set aside in the 2015/2016 financial budget to operationalise the Authority.
• However, the challenge is the existence of a parallel regional competitions authority — that of the Common Market for Eastern and Southern Africa (Comesa) — of which the East African countries except Tanzania are members.
• EAC member states will be expected to accord national competition authorities a legal mandate to co-operate with international, regional and national agencies in matters germane to the Competition Bill.

A regional body to be charged with enforcing laws that protect and promote free and fair competition among businesses with cross-border presence will be operational as from June.

The EAC Secretariat is in the final stages of setting up the organisational structure of the EAC Competition Authority, to be headed by a board of commissioners — one from each of the EAC partner states.

Other sections are the Office of the Registrar, Directorate of Mergers and Acquisitions, Directorate of Monopolies and Cartels, Directorate of Consumer Protection and Directorate of Corporate Affairs.

A total of $701,530 has been set aside in the 2015/2016 financial budget to operationalise the Authority.

According to Peter Kiguta, the EAC Director-General of Customs and Trade, the partner states have already nominated the commissioners who will work on ad hoc basis.

“The office will have five members made up of the chief registrar, two deputies and advisors,” said Mr Kiguta.

EAC trade ministers have directed partner states to confirm their nominees for the posts of commissioners by July 15.

The Competition Authority is expected to control or eliminate restrictive measures on companies seeking to invest in other partner states, and control mergers and acquisitions as well as the abuse of dominant positions of market power in East Africa.

It is expected that with the regional authority in place, small and medium enterprises will be shielded from anti-competitive practices.

READ: Unfair trade practices hurting East Africa’s investment climate

Monopolies or firms with a large market share abuse their dominance in different ways including engaging in price fixing, sharing of markets and compromising on quality of product to the detriment of consumers.

Parallel bodies

However, the challenge is the existence of a parallel regional competitions authority — that of the Common Market for Eastern and Southern Africa (Comesa) — of which the East African countries except Tanzania are members. For example, conflicting rules in resolving cross-border issues are likely to play out, as well as making the decision on which authority to approach when a dispute arises.

“The main problem with the Comesa Competitions Authority is the high merger fee set for companies in the region,” said Wang’ombe Kariuki, Director-General of the Competition Authority of Kenya.

The Comesa Secretariat last year revised its rules which now require companies looking to expand through acquisitions, and having a combined turnover of $5 million, to pay a $500,000 fee.