NAIROBI - Small businesses and individuals will find it easier to trade within the East Africa Community (EAC) once a proposed Bill aimed at curbing unfair business practices is passed.
The EAC Competition Regulations 2009 is aimed at stamping out unethical trade practices such as price fixing. The law is expected to be passed before July, which is when fruits of the protocol that allows free trade of goods within the region are expected to blossom.
The implementation of the EAC protocol begins today. Parliament will also set up the EAC Competition Authority, which will act as a court to settle regional trade disputes. It will be headed by five judges, each representing a member state.
“Although market dominance is not illegal per see, the new law prohibits this because it has been abused by companies that impose unfair prices making it difficult for small companies to enter the market,” Mr Jean-Guy Afrika, the EAC senior trade officer, is quoted as saying.
Small-scale industry players have cried foul over bigger firms using their financial clout to shove them aside.
Keroche Industries chief executive, Tabitha Karanja, says weak laws have made Kenya a fertile ground for some multinational companies to engage in anti-competition behaviour.
“The body must make sure it meets international standards where companies found guilty can be fined up to 10 per cent of their total income,” says Mrs Karanja.
In Kenya, legislation that governs anti-competitive behaviour includes the Restrictive Trade Practices and the Monopolies and Price Control Act.
The stipulated punishment for offenders is a slap on the wrist, says Mrs Karanja. “If you are found guilty the punishment is a Sh100,000 fine which is hardly enough,” she says.
Under the proposed Bill, companies that try to use their size to bully smaller competitors will be liable to fines of up to $100,000 or an 18-month jail sentence or both.
The Monopolies and Prices Commission of Kenya is mandated to deal with issues of fair trade. According to Mrs Karanja, investigations and arbitration take too long to conclude.
A case in point is the failed acquisition of Carbacid Investments by BOC Gases. The two firms were locked in a long standing tussle that resulted in shareholders having their stocks frozen from trading at the Nairobi Stock Exchange at a time when the stock market was at an all time high.
The EAC Competition Authority will, however, not take priority over local trade laws in cases where parties involved are from the same country.
This means that where parties involved are Kenyan, the Restrictive Trade Practices, Monopolies and Price Control Act comes into play. There is a pending Bill aimed at revamping the law.
In the meantime Uganda, Burundi and Rwanda have to play catch up by enacting competition laws by June. Once a common market is formed, it will be possible for goods and services to move freely within the five member states.