Spotlight turns on Monopolies office’s potency

Evaluated and approved

The current Restrictive Practices Act provides for a range of penalties including a maximum fine of Sh200, 000 or a jail term of up to three years for offending companies, a light sentence for companies whose annual turnovers are in excess of Sh10 billion and pales in comparison with international practice where firms such as software giant Intel was fined Sh127 billion or four per cent of its annual sales for restrictive business practice.

In its recent report for the year ending June 2009, the Monopolies and Prices Commissioner says a total of 19 merger/takeover notifications were received, 10 of which were evaluated and approved.

But Treasury has sponsored a Bill in Parliament, the Competition Bill 2009, which is before the House seeking creation of an independent competition authority.

Experts want the body de-linked from Treasury and given more powers to better serve Kenya’s liberalised market.

Kwame Owino, a programmes co-ordinator at the Institute for Economic Affairs, says the current competition laws are archaic and best served the country before deregulation of the market in 1994.

“In its present state, the Commission is poorly designed and is not cushioned from influence by the Finance ministry which can use it to do its bidding in the marketplace.” Mr Kariuki is hopeful the efficiency of his office lies in the hands of strengthened legal backing.

“Enactment of a new competition law should be expedited to effectively address challenges that come with the adoption of free market policies like collusion to fix prices, charging of excessive prices, and abuse of market dominance,” said Mr Kariuki in a previous interview.

A major limitation that the Monopolies Commissioner faces however is the fact the he cannot act on perceived cases of unfair trade practices such as exorbitant pricing of consumer commodities as was the case in the days before liberalisation of the economy when prices were controlled.

Those powers were reduced in the early 1990s, allowing the Commission to only take action on traders who are suspected of fixing consumer prices in a cartel-like manner.

Nairobi-based lawyer Catherine Mputhia says ignorance on the side of business practitioners is another factor hurting efforts at eliminating unfair practices and regulation.

“Unfair trade practices are something we experience day to day, but proprietors are ignorant of the fact that the law exists,” says Ms Mputhia.

The Monopolies Commissioner also has powers to analyse and approve or reject mergers and take-over notifications.

The authority, under the proposed law, will have powers to institute public hearings or investigations to determine if a company or a manufacturer has unreasonably increased prices and will be ordered to rescind the decision to increase prices.