STRUCTURE AND FUNCTIONS OF COMPETITION AUTHORITIES

Transcription

1 STRUCTURE AND FUNCTIONS OF COMPETITION AUTHORITIES KENYA The Monopolies & Prices Commission (MPC) is mandated to encourage competition in the economy by prohibiting restrictive trade practices, controlling monopolies and concentration of economic power. Also, it is mandated to advise the Government on Competition issues; nationally, regionally and internationally. The Department derives its mandate from the provisions of Cap. 504: The Restrictive Trade Practices Monopolies and Price Control Act. Objectives of the mandate Competition is often described as rivalry. Competitive rivalry is usually based on process, quantities, qualities, services, a combination of these, or other factors appreciated by consumers. The Department strives to maintain this rivalry for the benefit of the citizenry with an ultimate objective of: Guaranteeing consumers and producers considerable freedom of choice and action. Thus, competition is valued for its own sake, as the economic equivalent of political democracy. Ensuring that producers adjust use of production factors to changes in the demand unfettered. This switching of resources ensures that supply adapts to changes in demand and that the production factors of labor and capital are guided by these changes. Accelerating economic growth and thus increasing the prosperity of society. These results from increased R&D. Contributing to fair distribution of income. It reduces non-performancebased income as soon as it occurs. For example, monopolists do not work at maximum efficiency but usually with surplus capacities, thereby wasting scarce production factors. Consumers are supplied at higher prices and with lower quantities than would be the case in a competitive situation. This results in a primary distribution of income not commensurate with performance. 2.2 Functions of MPC Regulation of market structure. The Department analyses mergers and takeovers and recommends to the minister for approval/rejection. The Department also checks and controls unwarranted concentrations of

2 economic power and recommends to the minister for divestiture- where necessary. The main aim of this regulation is to reduce the scenario of a few market players dominating the economy hence leading to reduced consumer welfare, employment and government revenue. Regulation of market conduct. The department prohibits restrictive trade practices such as price-fixing, cartelisation, market/territorial allocation, exclusive dealings, tied purchases, discrimination, collusive tendering etc. If these practices are unabated, there will be reduced quality and quantity of goods in the market, high prices due to lessened competition and therefore negatively impacting on consumer welfare and the economy in general. Enforcement and compliance. The Department is also a quasi-judicial body. This means that it needs to follow-up the various consent agreements and or Ministerial Orders issued under Cap This demands site visits, more often, and or various economic sector studies. Advising the government on domestic, regional and international competition issues. This includes issues under EAC, COMESA and WTO. With the promulgation and their operationalization of the EAC and COMESA competition polices and laws, this function is expected to be among the cores of this Commission. The Department has a function of advocacy. This function is aimed at creating a culture of competition. 3.2 Procedures Restrictive Trade Practices COMPLAINT COMMISSIONER HEARING (i) By Individuals (ii) By Commissioner -Investigations -Consent Agreements -Representations -Recommendations

3 MINISTER -Gazettement of orders to desist -Requirement to Compensate TRIBUNAL -(i) Upholds Orders -(ii) Overrules Orders HIGH COURT -Final Determination Monopolies/Dominant Positions DIRECTION BY MINISTER TO INVESTIGATE COMMISSIONER MINISTER TRIBUNAL -Investigates -Recommends/Reports -Makes order to dispose if necessary -No Gazettement required -Upholds Order -Overrules Order HIGH COURT - Final Determination

4 Mergers/Takeovers APPLICATION -Application for Merger by Proposer COMMISSIONER MINISTER TRIBUNAL HIGH COURT -Investigates, -Evaluates -Recommendation to Minister -May Authorize -May Reject -Gazettes within Reasonable Time -Upholds Order or -Overrules Minister - Final Determination Note: Unauthorized Mergers are illegal ab initio; Agreements unenforceable. The Minister is only required to Gazette Order within reasonable time. On-going Reforms The Government in the Economic Recovery Strategy for Wealth and Employment Creation committed itself to Competition Law Reforms. For Kenya to succeed as a market economy and enhance the gains from liberalization, there is need to encourage fair competition by enhancing capacity to regulate and manage competition policy. The challenges that have undermined the effectiveness of the Monopolies and Prices Commission include the outdated Restrictive Trade Practices, Monopolies and Price Control Act;

5 inadequate financial resource allocation to the Commission therefore hampering its effectives; and lack of harmony between sector regulatory laws and competition law. Competition will be improved by enacting and enforcing relevant and appropriate laws supportive of competition; harmonizing competition law with sectoral regulatory laws; giving the Commission more autonomy and making adequate budgetary provisions to build the human resource capacity of competition authority to enable it to regulate all sectors of the economy. The formulation and implementation of the competition law will take cognizance of the special regional and preferential interests of the country. To this end, a draft Competition Bill has been prepared and it seeks to: 1. Create an autonomous Competition Authority with an established mechanism for management and technical manpower 2. Revise the enforcement procedures to make them easy to follow by the competition officials, the courts and also the business community. 3. Provide time frames and thresholds for merger and take-over cases. 4. Clearly spell out Litigation Procedures and assign specific functions to each institution. 5. Repeal part IV of the Restrictive Trade Practices, Monopolies and Price Control Act on price controls 6. Provide for Consumer welfare clauses 7. Establish a Competition Tribunal 8. Review provisions of the Restrictive Trade Practices, Monopolies and Price control Act relating to exemptions 9. Harmonize the competition laws with other laws regulating competition in other sectors 10. Review the provisions dealing with Restrictive Trade Practices 11. Harmonize the law with the best international practices and more specifically with the E.A.C and COMESA laws in cases involving cross border competition

6 Distribution of Duties and Functions COMMISSIONER Management of MPC and Articulation of Competition Policy Issues in and outside Kenya DEPUTY COMMISSIONER (ECONOMICS) 2.5 Sector-Specific Regulation And The Links Technical coordination of Investigation and Enforcement Divisions. Any other work as may be assigned by the MPC LEGAL DIVISION Deputy Commissioner (Legal) (Vacant) INVESTIGATION DIVISION Investigation into abuse of dominance Sectoral surveys and creation of databank Liaison with enforcement division Analysis of market structures ENFORCEMENT DIVISION Enforcement and Compliance Investigations Follow-up case reference at the AG Liaison with the Investigation Divisions ADMINISTRATION DIVISION Budget preparation and financial management, estimates of revenue Implementation of training programmes. Training and other Staff matters GHANA The competition bill once enacted will be applicable to all economic activities within or having an effect in the Republic but, subject to sub-section (3) shall not restrict the right of any person to restrain any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his/her rights which have been or may be conferred upon him/her under- 667); (a) the Copyright Act, 2005 (Act 690); (b) the Patents Act, 2003 (Act 657); (c) the Trade Marks Act, 2004 (Act 664); (d) the Geographical Indications Act, 2003 (Act 659); (e) the Industrial Design Act, 2003 (Act 660); (f) the Layout-Designs (Topographies) of Integrated Circuits Act, 2004 (Act (g) Protection Against Unfair Competition Act, 2000 (Act 589); (f) any other legislation governing transfer of intellectual property rights.

7 The Commission, or the Tribunal, as the case might be, may take any action, such as compulsory licensing and ordering parallel imports, to limit the exercise of any right acquired under subsection (2) if such right is being used to cause substantial lessening of competition in the relevant market. OBJECTIVES OF THE ACT The principal objectives of this Act are to maintain and encourage competition in markets, to promote and ensure fair and free competition and to protect the welfare and interests of consumers. Within the framework of the principal objectives in sub-section (1) the specific objectives of this Act shall, inter alia, include i. prohibiting and preventing restrictive trade practices; ii. prohibiting and preventing concentration of economic power; iii. prohibiting and preventing abuse of dominant position or market power; and iv. regulating mergers and acquisitions. FUNCTIONS OF THE COMMISSION 1. For the purpose of achieving the objectives of this Act in section 2, the functions of the Commission shall, inter alia, include a) monitoring trading practices in the country with the purpose of ensuring fair trade practices and of preventing restrictive trade practices; b) preventing, as far as practicable, the concentration of market power and its abuse; c) regulating mergers and acquisitions in terms of approving (with or without modifications) or disapproving them under sections 32 and 33; d) ordering investigations by the Complaints Officer into alleged prohibited practices and conduct and making prima facie conclusions based on the investigation reports; e) recommending trial and prosecution of offending parties to the Competition Tribunal; f) coordinating with a regulatory authority in terms of section 62 to harmonise the exercise of jurisdiction over competition matters within the relevant industry or sector, and ensuring consistent application of the principles of this Act; g) making available to persons engaged in business and other interested persons general information for their guidance with respect to the provisions of this Act; h) conducting research into matters dealt with by this Act;

8 i) educating the public by publishing journals and periodicals on research findings in trade, competition and matters affecting the interest of consumers; j) making recommendations to the Minister on the competition implications of government policies; k) acting as competition advocate and creating competition culture in the markets of the Republic; and l) performing any other functions that are incidental to its specific functions.