Assessment of the socio-economic implications of the
Uganda’s DRAFT competition law: addressing challenges at
national and regional levels.
BY DR M KAGGWA
BIEAC REGIONAL WORKSHOP ON
27-28 MAY 2010
NAIROBI - KENYA
INTRODUCTION
Parallel processes taking place in the EAC region:

Finalisation of formation of the EAC Common Market

EAC, SADC and COMESA discussion on integration of
three economic blocs

Economic Partnership Agreement (EPAs) with the EU
negotiations

Efforts to formulation of policies at national and at regional
level to complement these developments in quest of
sustainable economic growth and development.
the
Competition law important in realisation of envisaged regional
development of the above processes – it has implications on
market performance and prodn efficiency
INTRODUCTION
Specific to Uganda:

Explicit interest in the market competitiveness fairly new
phenomenon

Last 20 years, government has consistently reduced direct
involvement in economic activities – created bigger space for the
private sector to operate

Because markets are seldom perfect, govt slowly changing focus to
market regulation so as not compromise on envisaged consumer
benefit from liberalisation

A draft competition law (drafted almost unliterary)

Law beneficial but can have skewed
benefits/unintendedconsequences
Opportunity and need exist to assess the draft in terms national development
imperatives and consumer welfare
OBJECTIVES OF THE STUDY

Elucidate on competition policy and its relationship to
development and poverty reduction

Assesses the socio-economic implications of the Uganda’s
Competition Law

Assess the complimentary role of the EAC Competition policy
and law to the Uganda’s competition Law

Recommend on pro-development national competition
policy law for Uganda and by proxy for the EAC region
COMPETITION POLICY, DEVELOPMENT AND POVERTY
REDUCTION
The policy opens market for competition (ideally) leading to:
 Promotion of domestic market liberalisation
 Increased trade
 Increased inward investment
 Efficiency in making economic decisions and innovation
 Maximisation of consumer surplus
 Subsequently job creation and general improvement in the
standards of living
COMPETITION POLICY in multilateral negotiations

Policy has and is still on the agenda of multilateral
negotiations (Part of the Singapore Issues)

Difference of opinion between developed and developing
countries delayed finalisation

Policy currently implicit in most of trade agreements
COMPETITION in the Ugandan market
The Ugandan market is replete with anticompetitive practices
(Consent Survey, 2003):
 Restrictive business practices – Acquisition and vertical
restricting agreements in beer and soft drink sectors

Price cartels/artificial price fixing - Public utilities sector
(Water and electricity)

Market sharing behaviour – Passenger transport sector
(Buses and Taxis)
How developmental is Uganda’s draft competition law


Intention good – Foster and sustain competition in the
Ugandan market to protect consumer while safe guarding
freedom of economic actions
The draft is sensitive to the country’s development need by
way of exemptions
However

Exemptions are so generic/vague - hence vulnerable to
omission or misinterpretation. E.g. Exemption from full
compliance is provided for enterprises dealing with national
security or public interest(???)


the draft law and agricultural sector
Sector importance in poverty alleviation not explicitly addressed
(NB – 70% of nationals depend on the agriculture sector)
There is need for flexibility for the draft to be supportive to the
sector given the unique agricultural market characteristics:
Information asymmetry – market information not readily available to
farmers
Seasonality
Lack of storage facilities
Low price transmission from final produce buyer to farmers
No clear quality standards
Exploitative middlemen

Observations/implementation challenges
Appointment of Commissioner and Members a political potential implementation delays and not appointing best
people

Initiation of complaints requires understanding of the
competitive law beyond the understanding of an average
consumer

Keeping a look out and reporting on uncompetitive practices
has a cost that consumers may not be willing to incur –
outcome(s) being a public good/service

Implementation of the law is information intensive. Yet
success dependent on participants having enough
information of the market.

Recommendations on the draft law
Partial exemptions of some sectors e.g. agriculture from full
compliance

Strategic support of mergers among local firms to enable them
compete with foreign firms

Clear articulation of the relationship between the draft
competition law and other national policies especially the
industrial policy

Harmonisation of sector regulations which have a bearing on
competition and the draft competition law

Ensure the independence of the competition commission
The competition law should be flexible and dynamics take into account
level development and able to respond to changing development. Should
maintain not restrict existing policy space




Way forward
Intensify stakeholder awareness on the importance and
relevancy of competitive markets in the EAC region
Put in place a coordinated mechanism to monitor and report
on uncompetitive behavior in the market when the
competition law(s) are force
Have a strong and informed body to safeguard against state
capture in the implementation of the competition policy.
Lobby for and support to EAC governments to devote
adequate resources to competition aspect
“A regional entity, recognised by all EAC member states, to
coordinate/support activities of national CSOs as regard
market competition issues would be relevant “