To thrive, EAC needs competition policy
East African Business week, September 21, 2010
EAC must put in place a working competition plan
Business Daily Africa, September 15, 2010
By Fredrick Njehu
The East Africa common market is already up and running since its inauguration in July 2010. Though not much attention has been given to enactment of a functional competition policy, it would still be necessary for governments to adopt a competition policy if they are to promote the enjoyment of the four freedoms (labour, capital, goods and services) and prohibit restrictive trade practices within the EAC economies. Such a policy will basically encourage economic activity and maximise efficiency by enabling goods and resources to flow freely amongst partner states. Basically, the competition law will basically address three main situations; anticompetitive agreements, abuses of dominance or exclusionary behaviour and merger-control regulation.
An EAC competition policy will be an effective tool in reducing corruption, ensuring that consumers gain from regional integration, limit the power of the largest companies nationally and in the region. Thus, it’s no surprise that it might have many powerful enemies. Nevertheless, a diverse range of measures must be undertaken at EAC level to realise a competition regime. First, a sound legal drafting of a competition law is vital and must adhere to basic legal principles. The EAC governments will have to endow the authority with powers of investigation, including search and seizure. Investigatory powers should extend to the EAC regional competition authority established by the intergovernmental agreements as well as provide for an appeal process. Leading the competition authority will require determination, independence, and a tireless facility for public engagement. So, this requires the authority to increase its staff capacity, remunerate them well as well as offering them with trainings and this could only be realised through increased budgetary allocations to the authority from EAC governments.
Engaging stakeholders is essential in order to build alliances with the beneficiaries of a competition law. These coalitions will have to be built between the competition authority and those who will benefit from predictable and lasting implementation of competition rules. Such groups could include consumer organisations, farm associations, NGOs interested in good governance and economic justice, small business victimised by monopolists, and others. Media should also be involved to publicise the harms resulting from anticompetitive abuse and the benefits of rigorously enforcing the competition law. This should be necessitated by providing regular briefings for media of all kind, from mass market newspapers and broadcasters to sector-specific journals and NGO newsletters. Such alliances will have to be extended to relevant government departments and agencies. Intergovernmental cooperation against anticompetitive practices is imperative within the EAC via effective information sharing among competition authorities and facilitates investigative and prosecutorial cooperation.
Besides that, there are significant challenges to setting up the right institutions to handle competition law and policy. A major challenge to deal with would be to ensure political and societal support, enforcing the laws with limited resources, and dealing with limited resources, as well as dealing with cross-border enforcement problems.
The writer is a researcher at CUTS Africa Resource Centre, Nairobi (fkn@cuts.org)