Meru Dairy Co-operative Union staff at the processing plant in eastern
Kenya. East African Competition Authority is undertaking market studies
in selected sectors to inform of the prevalent malpractices. FILE PHOTO |
NATION
The East African Competition Authority has started operations
with a focus on investigating firms and trade associations engaged in
malpractices and exploitation of consumers through price fixing.
The authority is also undertaking sector studies to inform the competitiveness of the regional economy.
The EastAfrican has
learnt that the Authority which is based in Arusha has begun its
work, although the public are yet to be notified when they can start
engaging with it as provided for in the EAC Competition Act, 2006 and
the EAC Competition Regulations, 2010.
“The Authority
is already operational,” said Lilian Mukoronia, the Authority’s deputy
registrar in-charge of mergers and acquisitions.
Ms
Mukoronia said the Authority is already undertaking market studies in
selected sectors to inform of the prevalent malpractices.
Exploitation
The director- general of the Competition Authority of Kenya
(CAK) Wang’ombe Kariuki had earlier raised concerns over the creation of
cartels among firms operating across the borders with a view of
exploiting consumers.
“There is a serious problem of cartels as some of these companies operate across the region,” he said.
The
operationalistaion of the EAC Competition Authority comes even as some
partner states struggle to enact competition laws and set up
institutions to deal with trade malpractices and anti-competitive
behaviours in the market.
Kenya and Tanzania are the only two countries that have national competition laws together with respective institutions.
Burundi
has a competition law and establishment of the national competition
agency is awaiting approval while Rwanda has a competition law while the
establishment of a national competition agency was approved and
gazetted by Parliament. South Sudan and Uganda have both drafted
competition Bills.
The EAC Competition Authority
handles matters with a regional dimension and therefore there is no
obligation for partner states to have enacted competition laws and
set up institutions to enable the Authority to implement its mandate.
Fair competition
The
EAC Competition Act 2006 which came into force in December 2014
mandates the Authority to promote and protect fair competition in the
Community and to provide for consumer welfare. The Act prohibits among
others anti-competitive trade practices and abuse of market dominance.
It
provides for notification of mergers and acquisitions, notification of
subsidies granted by partner states and regulates public procurement.
The
Authority has appointed five commissioners — each partner state
nominated one commissioner. The Commissioners were considered and
appointed by the Council of Ministers and were sworn into office in
2016.
The authority is also reviewing the EAC Competition regulatory framework and developing laws.
Price fixing
In
2015, Kenya launched investigations into the conduct, practices and
procedures of trade associations, which have come under the spotlight
for colluding with its members to fix consumer prices.
This
was after it was established that despite clear provisions in the
Kenyan competition law, many trade associations continued to have rules,
practices and procedures that contravene the Act.
These trade malpractices are also undermining the region’s competitiveness as an investment destination.
Top on the list of trade associations investigated include those in the financial, agriculture and agro-processing sectors.
Kenya introduced the Special Compliance Programme, to ensure Kenyan firms complied with the competition law.
Individuals
found engaging in restrictive trade practices are, if convicted, liable
to imprisonment for a term not exceeding five years or to a fine not
exceeding $107,526.88.
Trade associations have been
blamed for being at the centre of many cartels, which are partly
responsible for the high prices of goods and services in Kenya.
According
to CAK, the high cost of living in the country is partly driven by
unscrupulous practices and a cartel-like business environment.
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