Competition laws: What makes for fairness? Easy – keeping the rules

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John Gichuhi

Competition between businesses is a main characteristic of a well-balanced market. In simple terms, competition is the supply by more than one person of similar goods in the market. The law requires fairness, competitiveness and effectiveness in all markets. Proper risk analysis for a business demands prioritizing compliance with the law. Business objectives such as profits, sales or market share may not be achieved if a business spends a substantial portion of its income on unnecessary fines levied by regulators such as the Competition Authority of Kenya.

The Competition Act No. 12 of 2010 sets out the legal parameters within which businesses should compete. The promotion of effective competition in the market and prevention of unfair market behaviour are some of the principal objects of the Act.

It is imperative for businesses to understand the legal framework governing competition in the Kenyan market. This includes how they may lawfully advertise their goods without misleading consumers.

A business that removes or defaces advertising material belonging to a competitor contravenes the law. Similarly, it is unlawful for some businesses to agree to deny other competitors space for advertisement as this amounts to collusive conduct.

Consumers are entitled to be advised on the correct charges applicable to the goods/services being advertised /sold. The main culprits here are mobile phone companies and internet service providers which use crafty adverts to confuse rather than inform the consumer on the correct price of the product/service.

Poor customer service, forcing a consumer to use a certain supplier, allocation of customers, imposition of unfair selling price, collusion on prices as well as variance between the price appearing on  the tag of an item in a supermarket shelf and the actual price charged at the till all constitute a contravention of the law.

Market dominance, merger controls, territory allocation and price fixing are other aspects of anti-competitive behaviour which is prohibited under the law. Any act which lessens competition is prohibited, unless exempted under the law.

Apart from the Competition Authority of Kenya which has overall responsibility to regulate competition in Kenya, there are also sector-specific regulators such as the Communications Authority of Kenya, which protects consumers of telecommunication services against exploitative behaviour by licensed telcos. Similarly, the Insurance Regulatory Authority (IRA) handles complaints arising from misconduct by insurance companies. The Central Bank of Kenya (CBK) protects consumers against exploitation by banks. The Advertising Standards body of Kenya regulates the advertising industry by ensuring that advertisements are fair and not misleading. The COMESA Competition Commission regulates competition matters on a regional scale.

Kenyans often complain about the existence of cartels and of the monopoly of some sectors of the economy by a few market players through unscrupulous means. Abuse of market dominance is also a great concern in some sectors of the economy. These are competition issues which CAK and the other regulators should address. Unchecked competition leads to among others, closure of businesses and resultant loss of jobs and taxes for Government.

According to CAK’s draft Strategic Plan (2017/2018 – 2020/2021) dated 13th July, 2017, CAK had by this date handled over 180 consumer complaints and investigated over 84 restrictive trade practices cases by businesses. The fines paid by companies to CAK for engaging in anti-competitive behaviour runs into millions of shillings. Such expenditure eats into the profits of a business unnecessarily. A business can avoid this by observing the dictates of the competition law.

Fair competition is good for the economy. Among other things, it boosts innovation, protects new market entrants and gives consumers a wider choice of better goods and services.

In conclusion, the need for every business to compete within the law cannot be overemphasized. Avoiding blatantly anti-competitive market behaviour and undertaking regular compliance audits can go a long way into avoiding unnecessary tussles with the regulators and the resultant fines which are by all means not small. For its part, the CA must be seen to be doing its job fairly and without bias. Most importantly, it is worth noting that at the centre of every successful business is a happy consumer.

Writer is an Advocate of the High Court of Kenya; gichuhijohn50@gmail.com

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