Expert warns on cross-border competition

Daily News, August 17, 2015

THE EAC needs laws geared to deal with anti-competitive practices in domestic markets by foreign companies.

CUTS International Official, Mr Cornelius Dube, said the region should address cross-border Competition Concerns through the EAC competition laws.

Mr Dube said there was need for regional competition authority platforms for cross border competition in other jurisdictions. “These refer to conduct by one or more firms whose effects would be felt in more than one country,” he said.

He was of the view that an individual firm which has presence in one or more countries can adopt common strategies in each of the countries which has suppressing competition as its objective.

Two or more firms with the presence on more than one country could also merge or enter into agreements which are anti-competitive, to be effected in the countries in which they have a presence, he noted.

He highlighted the famous international cartel examples which have damaged developing country economies as vitamins cartel (US$1.71 billion), citric acid cartel ($67 million), bromine cartel ($8 million), seamless steel cartel ($1.19 billion), graphite electrodes ($975 million) and lysine cartel ($43 million).

He said the adoption of a regional competition law and policy that applies to all the member States will definitely alleviate the jurisdictional problems of national competition authorities.

He said a regional authority would also allow national authorities to specialise on national issues only. He noted that the enactment of the EAC Competition Act in 2006 laid foundation for a regional healthy competition but the implementation of the EAC Competition Act has not seen much progress in spite of its relevance and need.

He noted that the EAC can enact the EAC Competition Act that seeks to establish a regional competition regulator. “Currently, many cross-border anti-competitive practices are going unchecked due to the absence of an overall regional regulator to deal with cross-border competition issues,” he said.

As a result weaker market players and consumers are left at the mercy of unfair business conduct by dominant firms (private or public) owned. The researcher noted the common types of cross-border anti-competitive practices that need to be addressed include anticompetitive mergers and acquisitions, market sharing and abuse of dominance.

CUTS International’s RijitSengupta said fair competition authorities are not yet established in all the EAC member states and capacity of national institutions to fulfil role according to the EAC Act is not given.

He said national legal framework needs to be in alignment with EAC Act – not yet undertaken, adding that political will must be created to ensure the motivation of stakeholders to prioritise implementation of the regional and national competition laws.

He noted FCT needs full support of all stakeholders including the government fulfilling its responsibilities fairly and efficiently (this includes being independent and financially empowered).

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