By ADAM IHUCHA -- The
East African community law on competition will come into force in December 2014,
promising better days for cross border trade, as unfair business practices will
be controlled.
The EAC Competition
Act, 2006, seeks, among other things, to promote fair trade and ensure consumer
welfare and to establish the regional Competition Authority.
It grants consumers the legal might
to take on unscrupulous traders who sell them substandard products and those
who offer poor quality services.
The EAC Council of Ministers recently
decided that the law should get off to a start in December 1st,
20014, culminating eight years’ delay occasioned by intermittent haggling and backpedalling
by the partner states.
“The East African Community Competition Act,
2006 shall come into force on December
1st, 2014” reads the latest EAC Council of Minister’s report, ending speculation
over the law enforcement.
Trade specialists say that while some EAC partner states had enacted
national competition acts, these laws are deemed inadequate to deal with
cross-border and multi-jurisdictional competition cases.
They urge that co-operation at the bilateral
level may be able to resolve and redress some anti-competitive and restrictive
business practices, but a regional framework provides a more consistent and
sustainable way of addressing these regional issues.
The East African Business Council
(EABC) Executive Director, Mr Andrew Luzze says that as the cross border trades
grow by leaps and bounds, a regional competition law becomes more crucial to check
unfair trade practices.
Available statistics show
that the EAC’s total intra-regional trade soared from $2 billion in 2005 to
$5.8 billion in 2012, while the total intra-regional exports augmented from
$500 million to o $3.2 billion in the period under review.
“Without regional competition
law, monopolies or firms with a lion market share can easily abuse their market
dominance by engaging in such activities as price fixing, sharing of markets
and compromising quality to the detriment of consumers” Mr Luzze says.
Whereas critics of
competition regulation say that it should not apply in a free market, as it
distorts the essence of the concept, EABC boss says that the rules are applied
even in the more advanced capitalist states and economic regions such as the European
Union and the US.
According to him the EAC competition law is
imperative, as it will create a level playing ground for major and small
companies to compete in a fair manner, contrary to the current environment
where major merchants tend to collude and set price.
The EAC Spokesperson, Richard Owora says at the moment, the secretariat
is working overtime to establish the regional competition authority to oversees
the operationalization of the law.
The structure of the authority as provided in the Act demands the five
commissioners -- one from each Partner State; one registrar; senior economist; senior
legal officer; accountant; personal secretary; driver; and; office attendant.
The council of Minister directed the EAC secretariat to convene a
meeting of competition experts in November, to consider the proposed structure,
category of staff and job descriptions and the budget to operationalize the
competition authority Act.
Content
The EAC
Competition Act, 2006, which would apply to all economic activities and sectors having
cross-border effect, for instance, contains prohibition of anti competitive
concerted practices.
For example, article No. 5, section (3)
provides that any concerted practice by undertakings restricting exports to or
imports from foreign countries is prohibited, if it is intended to have
anti-competitive effects on the relevant market within the Community or on
access of Community undertakings to exports or imports.
The same article, section (4)
stipulates that a person who contravenes this section commits an offence and
shall be liable to a fine of not more than one hundred thousand dollars.
Again, Article 8, of the law is talking
about abuse of market dominance as it provides in section (1) subsection (a)
that an undertaking holding a dominant position in the relevant market shall
not directly or indirectly impose unfairly high selling or unfairly low
purchasing prices or other unfair trading conditions.
The same article subsection (b) provides
that an undertaking holding dominant position in the relevant market shall not
limit production or technical development and innovation to the prejudice of
consumers.
The law also prohibits the
discrimination between consumers or suppliers according to non-commercial
criteria such as nationality or residence.
Article 9 (1) provides that an
undertaking holding a dominant position in the relevant market shall not engage
in any practice that excludes, or is intended to exclude, its competitors from
the market by means of predatory pricing; price squeezing and cross
subsidization.
It also prohibits an undertaking
holding a dominant position in the relevant market shall not engage in a
practice that harms the competitive position of competitors on downstream or
upstream markets by a refusal to deal; an access to an essential facility, tying
arrangements and unjustifiably discriminating among customers and suppliers.
Any person who contravenes the
provisions of this section commits an offence.
This Act shall not apply to restraints
on competition imposed by and resulting from a Partner State’s regulation of
specific sectors or industries to the extent that the anti-competitive conduct
is required by such regulation within their own Jurisdictions.
Article18 section (1) the Partner
States including all its organs and institutions and any public authority in
the Partner States shall with respect to any law, regulations, procedures or
practice regarding public procurement, extend non-discriminatory treatment to
all suppliers and to all products or services originating from or affiliated
with other Partner States.
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