PART ONE:EXPERIENCE AS A CP&L PRACTITIONER
IN KENYA
PART TWO: A CONSPECTUS OF THE COMESA
COMPETITION COMMISSION
By
Peter Muchoki Njoroge
Chairman
COMESA COMPETITION COMMISSION
Mr Philippe Brusick, Ex-Head of Competition Affairs at
UNCTAD in KENYA
PART ONE:CP&L IN KENYA
Lack of a competition culture in Kenya
•
Competition is a fairly new phenomenon in the developing and
least developing countries. As long as there are competing
manufacturers, wholesalers, retailers etc., many people will
think that there is adequate competition. As a new phenomenon
Competition has not been understood well.
•
For example, when the Kenyan Law was being debated in
parliament some members of parliament thought that
competition law and policy should be applied to curtail the
preponderance in business by a certain group of Kenyans vis-àvis those deemed to be indigenous.
•
Yet another member of parliament felt that competition law
should be applied to prohibit the practice of requiring new
entrepreneurs to pay goodwill.
•
If law makers did not understand the law they were
promulgating, then the common citizenry is obviously less
informed.
Lack of support by the policy makers,
public and the business community
•
Policy makers do not accord competition Authorities required
support. Recently, when two members of parliament wanted to
reintroduce price controls in the areas of Banking and
Petroleum, the amount of support they got from parliament, the
public and the unaffected sectors of the business community
was phenomenal.
•
Businesses only support the idea of competition when they are
affected negatively. In the developing countries, Kenya
included, policy makers are often the owners of key businesses.
This reality poses veritable challenges to the enforcement of
competition policy and law.
•
Quite often the law makers promulgating competition law own
the businesses which may require regulation. Possibilities of
conflicts of interest are legion.
The Judiciary
•
The Restrictive Trade Practices Tribunal in Kenya has handled
very few cases. Very few competition cases have gone to the
High Court.
•
As a result there is no guiding jurisprudence and there are no
precedents.
•
It is necessary that the judiciary is brought on board through
requisite education and advocacy programmes.
•
That way, the business community and the public may be more
willing to face tribunals and courts.
Lack of Adequate Financial Resources
•
In developing countries such as Kenya, Competition Authorities
are not accorded adequate financial resources.
•
This may be understood when we juxtaposition the
requirements of Competition Authorities with more mundane
needs such as clean water, health, roads, education etc.
•
Even these supposedly more immediate needs do not receive
adequate funds as enough funds are not there in the first place.
Lack of Adequate Human Resources
•
Almost all Competition authorities in developing countries lack
adequate human power.
•
To a politician, it does not make sense to train one highly
qualified competition expert abroad when the same resources
could be expended, for example, in training thirty health nurses.
•
There is need to sensitize policy makers on the need to have
qualified practitioners.
•
The private sector has contributed a lot to lack of qualified
personnel. In a number of instances, the private sector has
poached from the competition authorities’ employees who have
been highly trained. This is because the private sector offers
better salaries.
Lack of Legal and Financial Ability to
Delve into the Areas of Education and
Advocacy
•
There is need to give legal, financial and operational authority to
competition authorities. This will allow competition authorities to
handle education and advocacy matters.
•
Regarding inadequacy of financial resources, it is hoped that
effective advocacy will facilitate the increase of the competition
authority’s budget.
•
Autonomy will also have a positive effect in this area as the
competition authority can impose fees to cover costs of its
services in areas such as mergers and takeovers.
Sector Regulators
•
Sector Regulators in Kenya, as in other countries, are created
by separate pieces of legislation. Quite often, the law creating a
sector regulator contains a portion dealing with competition in
the sector.
•
There should be deliberate harmonization of sectoral laws with
the competition law.
•
The competition authority should, at least, have concurrent
jurisdiction with sector regulators in all matters spawning
competition issues.
•
On purely competition issues, the competition authority should
have the final word.
Prosecution of offenders
•
The Restrictive Trade Practices, Monopolies and Price Control
Act has provided for offences and penalties under Sections 21
(Restrictive Trade Practices) and 26 (control of monopolies and
concentrations of economic power).
•
The prosecution of the offenders is, however, not done by the
competition authority.
•
This has to be executed by the national police force and/or the
Attorney General’s office.
•
This problem is replicated in many commonwealth countries.
Difficult economic realities
•
In the area of mergers and takeovers, developing countries
sometimes find themselves between the rock and hard place.
•
For example, a company will be placed under receivership.
Eventually a proposal will be forwarded to the competition
authority for its takeover by a competitor.
•
The Competition Authority may find that no other competitor was
interested in the failed firm.
•
Considering the dearth of locally harnessed investable capital
in these economies, in order to save employment and to guard
against expensive equipment going to waste, and for lack of an
alternative, the Competition authority is forced by circumstances
to approve the proposal.
•
This will also apply in the takeover of businesses and assets of
foreign companies divesting from developing countries.
Access to Redress by members of the
Public
•
Section 66 of the Restrictive Trade Practices, Monopolies and
Price Control Act restricts the right of appeal to the Competition
Tribunal, and hence to the High Court, to those parties involved
in the dispute right from the beginning.
•
This disqualifies other legal and natural persons from accessing
legal redress.
•
This is an area which may require improvement and this
problem is replicated in many other jurisdictions.
Part 2: A CONSPECTUS OF THE COMESA
COMPETITION COMMISSION
• COMMISSION MEMBERS
with Minister of Trade, Malawi
and key officials from the
region. Blantyre, Malawi will be
the Commission’s HQS.
Introduction
• The COMESA Competition Commission is a COMESA institution as
is the PTA Bank, the Clearing House, the re-insurance company
(ZEP-Re), the Leather and leather Products Institute (LLPI) and the
Court of Justice.
• It has a specific mandate which seeks to contribute to the equitable
and harmonious integration and development of the COMESA
region.
• COMESA members are: Burundi, Comoros, Congo DR, Djibouti,
Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi,
Mauritius, Rwanda, Uganda, Sychelles, Swaziland, Sudan, Zambia
and Zimbabwe.
Relations with Other Organs/Institutions
of COMESA
• As an institution of COMESA, it is related to other Policy Organs of
COMESA in a structured manner to ensure that its contribution to
the realisation of COMESA’s short and long-term objectives is
synchronised, supportive and in tandem with the activities and
programmes of other COMESA organs and institutions.
• The Competition Commission, like the Court of Justice, will promote
and enhance COMESA’s rules-based character.
• The Board of Commissioners,the superior organ, has oversight
responsibilities over the Commission in both administrative
arrangements and operations - determination of cases.
• The executive arm of the Commission will issue initial
determinations which can be confirmed or varied by the Board.
Relations with other institutions-Contd
• Appeals against Board decisions will be taken to the COMESA
Court of Justice.
• The relationship between the Commission and other Policy Organs
of COMESA relate to appointment of members of the Board. This is
done by the Council of Ministers.
• The Board is empowered to formulate Competition Rules but these
must be confirmed by the Council.
• Administratively, the Council will approve the Commission’s budget.
• Council shall also approve the terms and conditions of appointment
of the Director of the Commission which shall be fixed by the Board
of Commissioners.
Relations with national competition
authorities
• National competition authorities will relate directly with the
Competition Commission and such co-operation will be essential for
the Commission and the Board to carry out their functions properly.
• The Role of Secretary-General
• As is the case with the Court of Justice, it is expected that the
Secretary General may refer an issue to the Competition
Commission under powers vested in him by Article 17 paragraph 8
of the Treaty.
• The Chairperson of the Board shall also liaise with the SecretaryGeneral on matters of policy including budgetary issues.
Functions and Powers of the
Commission
•
•
•
•
•
•
•
•
The functions and the powers of the Competition Commission are
contained in Articles 7 and 8 which are reproduced in full herebelow.
Article 7
Functions of the Commission
1. The Commission shall apply the provisions of these
Regulations with regard to trade between Member States and be
responsible for promoting competition within the Common Market.
2. In order to accomplish that which is set out in paragraph 1
above, the Commission shall:
monitor and investigate anti-competitive practices of undertakings
within the Common Market, and mediate disputes between
Member States concerning anti-competitive conduct;
regularly review regional competition policy so as to advise and
make representations to the Council with a view to improving on
the effectiveness of the Regulations;
Article 7 Contd
• help Member States promote national competition laws and
institutions, with the objective of the harmonisation of those national
laws with the regional Regulations to achieve uniformity of
interpretation and application of competition law and policy within
the Common Market;
• co-operate with competition authorities in Member States;
• co-operate and assist Member States in the implementation of its
decisions;
• provide support to Member States in promoting and protecting
consumer welfare;
Article 7 Contd
• Facilitate the exchange of relevant information and expertise;
• enter into such arrangements as will enhance its ability to monitor
and investigate the impact of conduct outside the Common Market
but which nevertheless has, or may have, an impact on trade
between Member States;
• be responsible for developing and disseminating information about
competition policy and consumer protection policy;
• co-operate with other agencies that may be established or
recognised by COMESA to monitor and regulate any specific sector.
Article 8
• Any person who contravenes or fails to comply with any provision of
these Regulations or any Rules made hereunder, or any directive or
order lawfully given, or any requirement lawfully imposed under
these Regulations or any Rules made hereunder, for which no
penalty is provided shall be determined to have breached the
Regulations and shall be liable pursuant to that determination to a
fine (in an amount to be determined by Rules) and/or such other
penalty as may be assessed.
• The Commission may enter into such arrangements for the provision
of goods and services as may be necessary for the efficient
performance of its functions.
• The Commission, pursuant to the provisions of Article 55 of the
Treaty, may establish its own rules of procedure to effectively
implement the Regulations.
• The Commission may appoint, on such terms and conditions as it
may determine, such other staff as it considers necessary for the
performance of its functions under these Regulations.
Article 8 contd
• The Commission shall, to the extent required to remedy or penalise
anti-competitive activity:
• order the termination or nullification as the case may require of
agreements, conduct, activities or decisions prohibited by Part 3 of
these Regulations;
• direct the enterprise to cease and desist from anti-competitive
conduct and to take such steps as it believes may be necessary to
overcome the effects of abuse of its dominant position in the market,
or any other business conduct inconsistent with the principles as set
out in these Regulations;
• order payment of compensation to persons affected;
• impose fines for breaches of the provisions of these Regulations
Article 8 Contd
• Article 8
• Powers of the Commission
• 1.The Commission may, in respect of trade between Member
States, monitor, investigate, detect, make determinations or take
action to prevent, inhibit and/or penalise undertakings whose
business activities appreciably restrains competition within the
Common Market.
• 2.In conducting its investigations, the Commission may, in
accordance with the applicable provisions of these Regulations and
in keeping with the principles of natural justice:
• order any person to appear before it to give evidence;
• require the discovery or production of any document or part thereof;
and
• take any other reasonable action which may be necessary in
furtherance of the investigation.
• 3.Based on the findings of the investigation, the Commission may
make a determination that there has been a breach of the
Regulations in that the conduct at issue has, or is likely to have, an
appreciable negative competitive impact and is inconsistent with the
objectives of the Common Market.
Composition of the Board of
Commissioners
•
Matters to do with the Composition of the Board of
Commissioners, which is the policy and oversight body of the
Commission, are contained in Article 13 which is reproduced in
full herebelow:
Article 13
• Article 13
• Composition of the Board of Commissioners
• The Board shall consist of not less than nine (9) and not more than
thirteen (13) Commissioners appointed by the Council on the
recommendation of the Secretary-General. The nominations of the
Secretary-General shall reflect the regional character of the
Common Market.
• The Chairperson and the Vice-Chairperson shall be elected by the
Board from among its members.
• The persons to be recommended under paragraph 1 above shall be
chosen for their ability and experience in competition law and policy,
industry, commerce, public administration, labour, economics, law,
consumer protection and small scale business matters.
Article 13 contd
• No person shall be recommended for appointment as a
Commissioner unless he/she is a citizen of a Member State.
• The Chairperson shall assign three of the Commissioners to be fulltime members of the Board. The full-time Commissioners shall each
have suitable qualifications and experience in law and economics
and will form the committee responsible for initial determinations.
• No member of the Board shall involve himself/herself in any way in
the day to day administration of the Commission.
APPRECIATION
• I wish to thank CUTS and our Ghanaian hosts
for inviting me to this function.
• Goodbye. Au revoir. Tres Bien, Merci.
Sweet Waters Camp, Nanyuki, KENYA