A few tweaks that could make Kenyan competition law that much more effective

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By Alexey Chechenin

Both Kenya and Russia started processes of reducing governmental influence on national economies in 1980s. One of the most important steps towards liberalisation of economy was the establishment of anti-monopoly regulation.

The first legal act in Kenya to protect and develop competition was the Restrictive Trade Practices, Monopolies and Price Control Act (Cap.504 of the Laws of Kenya in 1988), which came into effect in 1989. Because it was proven ineffective, it was replaced by The Competition Act, 2010.

On the other hand, Russian history of anti-monopoly regulation started with the adoption of two federal acts: On Competition and Limitation of Monopolistic Activity on Commodity Markets, 1991 and On Protection of Competition on the Financial Services Market, 1999. To develop and systematise regulative norms, a federal law On Protection of Competition (hereinafter The Law On Protection of Competition) was adopted in 2010.

The existence of a special authority for protection of competition is provided in both (Kenyan and Russian) Acts. Section 7 of the Competition Act says that the Competition authority is a body corporate that “exercises its powers independently and impartially without fear or favour”. Independence is maintained by the order of appointment of its members including the Director-General, who must be approved by Parliament.

Russian federal antimonopoly body as stated in Article 4 of the Law On protection of Competition is the federal anti-monopoly body and its territorial offices. It is incorporated in the structure of the executive power of Russian Federation, and a significant part of regulation of the status and functions of the authority is stated in subordinate legislation. The official name of the authority is the Federal Antimonopoly Service (the FAS).

It seems obvious that the differences between Kenyan and Russian antitrust authorities are connected mostly with the differences in constitutional arrangements of governmental powers then with national peculiarities of competitive law.

Amid some similarities between the two Acts, there is at least a one remarkable difference – the lack of the legal consequences of governmental acts, which restrict (or possibly can restrict) competition, in the Competition Act.

There are some provisions in Section 9 of the Competition Act, which can be read as legal instruments for the antimonopoly regulation of activities of authorities: study government policies, procedures and programmes, legislation and proposals for legislation so as to assess their effects on competition and consumer welfare and publicise the results of such studies; investigate policies, procedures and programmes of regulatory authorities so as to assess their effects on competition and consumer welfare and publicise the results of such studies; participate in deliberations and proceedings of government, government commissions, regulatory authorities and other bodies in relation to competition and consumer welfare; make representations to government, government commissions, regulatory authorities and other bodies on matters relating to competition and consumer welfare, and; advise the government on matters relating to competition and consumer welfare.

Despite this, one may not find an answer to the simple question, what can the Competition Authority of Kenya do in the event a county government creates an Act that apparently restricts competition? Let’s imagine that such an Act prohibits any construction of towers for transmitters with the exception of the largest state-owned mobile network operator. Though the problem can be solved with constitutional legal instruments, or even with the help of anticorruption legislation, what about prompt and efficient measures from the Competition Authority? The Competition Act provides no ground for such measures.

Chapter 3 of The Law On Protection of Competition consists of two articles that prohibit wide-ranging activities by all kind of governmental bodies, including issuing Acts and regulations, which possibly restrict competition. It includes prohibition of unreasonable preventative activities of economic entities, in particular, by establishing requirements to goods or economic entities that are not provided for by the legislation of the Russian Federation, proving priority access to information and creating discriminatory conditions.

As mitigation, Sub-section 1 of Section 21 of The Competition Act can be amended to read, “Agreements between undertakings, decisions by associations of undertakings, decisions by undertakings or concerted practices by undertakings, acts, actions and regulations by National or County government or any state body which have as their object or effect the prevention, distortion or lessening of competition in trade in any goods or services in Kenya, or a part of Kenya, are prohibited, unless they are exempt in accordance with the provisions of Section C of this Part”.

Writer is a Russian lawyer with an interest in Kenyan law; allexx82@yandex.ru

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