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Personal Finance

Legal gears to engage in fierce competition

Unfair trade practises
Unfair trade practises happen when a business resorts to fraudulent activities which may expose consumers to danger. PHOTO | FOTOSEARCH 

The right to form business has been provided for in Article 36 of the Constitution, which allows citizens to form or join associations. While this mostly applies to interest group associations, it has been argued by some quarters that this includes the freedom to incorporate and operate businesses as long as all the requirements have been met.

Most businesses have to contend with competition. The modern legislative environment encourages fair competition in most sectors. The benefits reflect on the economy and consumer welfare.

Therefore, competition is a reality that all businesses must deal with, unless one undertakes very innovative businesses where there are no competitors. The blue ocean strategy, a theory in which businesses make entry into sectors with little or no competition, was championed by Prof W. Chan Kim and Renee Mauborgne. It calls for a lot of innovation.

Strategic planning experts advice businesses to find their niche and focus on that. This calls for doing an analysis to find out the gaps left by a competitor and filling them with your key strengths. Businesses that find their competitive advantage and capitalise on iy report more profits than those which have not.

Intellectual property rights (IPRs) are one way to help your business attain a competitive advantage over competitors. The nature of IPRs in some cases, is that they grant to the owners exclusive rights over their creations and are also reported as intangible assets. With the right business strategy, IPRs can be positioned to guard against replication by competitors.

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It is important to deal fairly with competition and consumers in your strategy. Some businesses resort to unethical and sometimes criminal acts. This is risky in terms of litigation by the competitors and consumer rights actions. Your business may also lose its reputation. Therefore avoid compromising on quality so as to undercut competitors. If your goods and in some cases services, are deemed substandard and harmful, your business may expose itself to criminal litigation.

Unfair trade practises happen when a business resorts to fraudulent activities which may expose consumers to danger. Sale of substandard food and drinks is a crisis that Kenya has been dealing with. While most of the action against the sellers is taken by the authorities, consumer rights groups should also take up the issue through public interest litigation where applicable.

Other than the criminal laws which are mostly pursued by the State against offending sellers, the public and consumers have redress under consumer rights laws and specific laws such as the Food Act (Cap 254), Public Health Act and others. I will deal with this more substantively in my next column.

Some of the actions that can be deemed to be unfair trade practises include false representations, which is common especially during marketing. False advertising is an unfair trade practise. Therefore it is important to consider competition laws in sales, marketing and advertising as false advertising is anti-consumer.

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