PART%20ONE:EXPERIENCE%20AS%20A%20CP

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PART ONEEXPERIENCE AS A CPL PRACTITIONER IN
KENYAPART TWO A CONSPECTUS OF THE COMESA
COMPETITION COMMISSION

• By
• Peter Muchoki Njoroge
• Chairman
• COMESA COMPETITION COMMISSION

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Mr Philippe Brusick, Ex-Head of Competition
Affairs at UNCTAD in KENYA
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PART ONECPL IN KENYALack of a competition
culture in Kenya

• Competition is a fairly new phenomenon in the
  developing and least developing countries. As
  long as there are competing manufacturers,
  wholesalers, retailers etc., many people will
  think that there is adequate competition. As a
  new phenomenon Competition has not been
  understood well.
• For example, when the Kenyan Law was being
  debated in parliament some members of parliament
  thought that competition law and policy should be
  applied to curtail the preponderance in business
  by a certain group of Kenyans vis-à-vis those
  deemed to be indigenous.
• Yet another member of parliament felt that
  competition law should be applied to prohibit the
  practice of requiring new entrepreneurs to pay
  goodwill.
• If law makers did not understand the law they
  were promulgating, then the common citizenry is
  obviously less informed.

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Lack of support by the policy makers, public and
the business community

• Policy makers do not accord competition
  Authorities required support. Recently, when two
  members of parliament wanted to reintroduce price
  controls in the areas of Banking and Petroleum,
  the amount of support they got from parliament,
  the public and the unaffected sectors of the
  business community was phenomenal.
• Businesses only support the idea of competition
  when they are affected negatively. In the
  developing countries, Kenya included, policy
  makers are often the owners of key businesses.
  This reality poses veritable challenges to the
  enforcement of competition policy and law.
• Quite often the law makers promulgating
  competition law own the businesses which may
  require regulation. Possibilities of conflicts
  of interest are legion.

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The Judiciary

• The Restrictive Trade Practices Tribunal in Kenya
  has handled very few cases. Very few competition
  cases have gone to the High Court.
• As a result there is no guiding jurisprudence and
  there are no precedents.
• It is necessary that the judiciary is brought on
  board through requisite education and advocacy
  programmes.
• That way, the business community and the public
  may be more willing to face tribunals and courts.

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Lack of Adequate Financial Resources

• In developing countries such as Kenya,
  Competition Authorities are not accorded adequate
  financial resources.
• This may be understood when we juxtaposition the
  requirements of Competition Authorities with more
  mundane needs such as clean water, health, roads,
  education etc.
• Even these supposedly more immediate needs do not
  receive adequate funds as enough funds are not
  there in the first place.

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Lack of Adequate Human Resources

• Almost all Competition authorities in developing
  countries lack adequate human power.
• To a politician, it does not make sense to train
  one highly qualified competition expert abroad
  when the same resources could be expended, for
  example, in training thirty health nurses.
• There is need to sensitize policy makers on the
  need to have qualified practitioners.
• The private sector has contributed a lot to lack
  of qualified personnel. In a number of
  instances, the private sector has poached from
  the competition authorities employees who have
  been highly trained. This is because the private
  sector offers better salaries.

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Lack of Legal and Financial Ability to Delve into
the Areas of Education and Advocacy

• There is need to give legal, financial and
  operational authority to competition authorities.
  This will allow competition authorities to handle
  education and advocacy matters.
• Regarding inadequacy of financial resources, it
  is hoped that effective advocacy will facilitate
  the increase of the competition authoritys
  budget.
• Autonomy will also have a positive effect in this
  area as the competition authority can impose fees
  to cover costs of its services in areas such as
  mergers and takeovers.

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Sector Regulators

• Sector Regulators in Kenya, as in other
  countries, are created by separate pieces of
  legislation. Quite often, the law creating a
  sector regulator contains a portion dealing with
  competition in the sector.
• There should be deliberate harmonization of
  sectoral laws with the competition law.
• The competition authority should, at least, have
  concurrent jurisdiction with sector regulators in
  all matters spawning competition issues.
• On purely competition issues, the competition
  authority should have the final word.

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Prosecution of offenders

• The Restrictive Trade Practices, Monopolies and
  Price Control Act has provided for offences and
  penalties under Sections 21 (Restrictive Trade
  Practices) and 26 (control of monopolies and
  concentrations of economic power).
• The prosecution of the offenders is, however,
  not done by the competition authority.
• This has to be executed by the national police
  force and/or the Attorney Generals office.
• This problem is replicated in many commonwealth
  countries.

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Difficult economic realities

• In the area of mergers and takeovers, developing
  countries sometimes find themselves between the
  rock and hard place.
• For example, a company will be placed under
  receivership. Eventually a proposal will be
  forwarded to the competition authority for its
  takeover by a competitor.
• The Competition Authority may find that no other
  competitor was interested in the failed firm.
• Considering the dearth of locally harnessed
  investable capital in these economies, in order
  to save employment and to guard against expensive
  equipment going to waste, and for lack of an
  alternative, the Competition authority is forced
  by circumstances to approve the proposal.
• This will also apply in the takeover of
  businesses and assets of foreign companies
  divesting from developing countries.

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Access to Redress by members of the Public

• Section 66 of the Restrictive Trade Practices,
  Monopolies and Price Control Act restricts the
  right of appeal to the Competition Tribunal, and
  hence to the High Court, to those parties
  involved in the dispute right from the beginning.
• This disqualifies other legal and natural
  persons from accessing legal redress.
• This is an area which may require improvement and
  this problem is replicated in many other
  jurisdictions.

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Part 2 A CONSPECTUS OF THE COMESA COMPETITION
COMMISSION

• COMMISSION MEMBERS with Minister of Trade, Malawi
  and key officials from the region. Blantyre,
  Malawi will be the Commissions HQS.

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Introduction

• The COMESA Competition Commission is a COMESA
  institution as is the PTA Bank, the Clearing
  House, the re-insurance company (ZEP-Re), the
  Leather and leather Products Institute (LLPI) and
  the Court of Justice.
• It has a specific mandate which seeks to
  contribute to the equitable and harmonious
  integration and development of the COMESA region.
• COMESA members are Burundi, Comoros, Congo DR,
  Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya,
  Madagascar, Malawi, Mauritius, Rwanda, Uganda,
  Sychelles, Swaziland, Sudan, Zambia and Zimbabwe.

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Relations with Other Organs/Institutions of COMESA

• As an institution of COMESA, it is related to
  other Policy Organs of COMESA in a structured
  manner to ensure that its contribution to the
  realisation of COMESAs short and long-term
  objectives is synchronised, supportive and in
  tandem with the activities and programmes of
  other COMESA organs and institutions.
• The Competition Commission, like the Court of
  Justice, will promote and enhance COMESAs
  rules-based character.
• The Board of Commissioners,the superior organ,
  has oversight responsibilities over the
  Commission in both administrative arrangements
  and operations - determination of cases.
• The executive arm of the Commission will issue
  initial determinations which can be confirmed or
  varied by the Board.

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Relations with other institutions-Contd

• Appeals against Board decisions will be taken to
  the COMESA Court of Justice.
• The relationship between the Commission and other
  Policy Organs of COMESA relate to appointment of
  members of the Board. This is done by the
  Council of Ministers.
• The Board is empowered to formulate Competition
  Rules but these must be confirmed by the Council.
• Administratively, the Council will approve the
  Commissions budget.
• Council shall also approve the terms and
  conditions of appointment of the Director of the
  Commission which shall be fixed by the Board of
  Commissioners.

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Relations with national competition authorities

• National competition authorities will relate
  directly with the Competition Commission and such
  co-operation will be essential for the Commission
  and the Board to carry out their functions
  properly.
• The Role of Secretary-General
• As is the case with the Court of Justice, it is
  expected that the Secretary General may refer an
  issue to the Competition Commission under powers
  vested in him by Article 17 paragraph 8 of the
  Treaty.
• The Chairperson of the Board shall also liaise
  with the Secretary-General on matters of policy
  including budgetary issues.

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Functions and Powers of the Commission

• The functions and the powers of the Competition
  Commission are
• contained in Articles 7 and 8 which are
  reproduced in full here-below.
• Article 7
• Functions of the Commission
• 1. The Commission shall apply the provisions of
  these Regulations with regard to trade between
  Member States and be responsible for promoting
  competition within the Common Market.
• 2. In order to accomplish that which is set out
  in paragraph 1 above, the Commission shall
• monitor and investigate anti-competitive
  practices of undertakings within the Common
  Market, and mediate disputes between Member
  States concerning anti-competitive conduct
• regularly review regional competition policy so
  as to advise and make representations to the
  Council with a view to improving on the
  effectiveness of the Regulations

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Article 7 Contd

• help Member States promote national competition
  laws and institutions, with the objective of the
  harmonisation of those national laws with the
  regional Regulations to achieve uniformity of
  interpretation and application of competition law
  and policy within the Common Market
• co-operate with competition authorities in Member
  States
• co-operate and assist Member States in the
  implementation of its decisions
• provide support to Member States in promoting and
  protecting consumer welfare

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Article 7 Contd

• Facilitate the exchange of relevant information
  and expertise
• enter into such arrangements as will enhance its
  ability to monitor and investigate the impact of
  conduct outside the Common Market but which
  nevertheless has, or may have, an impact on trade
  between Member States
• be responsible for developing and disseminating
  information about competition policy and consumer
  protection policy
• co-operate with other agencies that may be
  established or recognised by COMESA to monitor
  and regulate any specific sector.

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Article 8

• Any person who contravenes or fails to comply
  with any provision of these Regulations or any
  Rules made hereunder, or any directive or order
  lawfully given, or any requirement lawfully
  imposed under these Regulations or any Rules made
  hereunder, for which no penalty is provided shall
  be determined to have breached the Regulations
  and shall be liable pursuant to that
  determination to a fine (in an amount to be
  determined by Rules) and/or such other penalty as
  may be assessed.
• The Commission may enter into such arrangements
  for the provision of goods and services as may be
  necessary for the efficient performance of its
  functions.
• The Commission, pursuant to the provisions of
  Article 55 of the Treaty, may establish its own
  rules of procedure to effectively implement the
  Regulations.
• The Commission may appoint, on such terms and
  conditions as it may determine, such other staff
  as it considers necessary for the performance of
  its functions under these Regulations.

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Article 8 contd

• The Commission shall, to the extent required to
  remedy or penalise anti-competitive activity
• order the termination or nullification as the
  case may require of agreements, conduct,
  activities or decisions prohibited by Part 3 of
  these Regulations
• direct the enterprise to cease and desist from
  anti-competitive conduct and to take such steps
  as it believes may be necessary to overcome the
  effects of abuse of its dominant position in the
  market, or any other business conduct
  inconsistent with the principles as set out in
  these Regulations
• order payment of compensation to persons
  affected
• impose fines for breaches of the provisions of
  these Regulations

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Article 8 Contd

• Article 8
• Powers of the Commission
• 1.The Commission may, in respect of trade between
  Member States, monitor, investigate, detect, make
  determinations or take action to prevent, inhibit
  and/or penalise undertakings whose business
  activities appreciably restrains competition
  within the Common Market.
• 2.In conducting its investigations, the
  Commission may, in accordance with the applicable
  provisions of these Regulations and in keeping
  with the principles of natural justice
• order any person to appear before it to give
  evidence
• require the discovery or production of any
  document or part thereof and
• take any other reasonable action which may be
  necessary in furtherance of the investigation.
• 3.Based on the findings of the investigation, the
  Commission may make a determination that there
  has been a breach of the Regulations in that the
  conduct at issue has, or is likely to have, an
  appreciable negative competitive impact and is
  inconsistent with the objectives of the Common
  Market.

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Composition of the Board of Commissioners

• Matters to do with the Composition of the Board
  of Commissioners, which is the policy and
  oversight body of the Commission, are contained
  in Article 13 which is reproduced in full
  herebelow

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Article 13

• Article 13
• Composition of the Board of Commissioners
• The Board shall consist of not less than nine (9)
  and not more than thirteen (13) Commissioners
  appointed by the Council on the recommendation of
  the Secretary-General. The nominations of the
  Secretary-General shall reflect the regional
  character of the Common Market.
• The Chairperson and the Vice-Chairperson shall be
  elected by the Board from among its members.
• The persons to be recommended under paragraph 1
  above shall be chosen for their ability and
  experience in competition law and policy,
  industry, commerce, public administration,
  labour, economics, law, consumer protection and
  small scale business matters.

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Article 13 contd

• No person shall be recommended for appointment as
  a Commissioner unless he/she is a citizen of a
  Member State.
• The Chairperson shall assign three of the
  Commissioners to be full-time members of the
  Board. The full-time Commissioners shall each
  have suitable qualifications and experience in
  law and economics and will form the committee
  responsible for initial determinations.
• No member of the Board shall involve
  himself/herself in any way in the day to day
  administration of the Commission.

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APPRECIATION

• I wish to thank CUTS and our Ghanaian hosts for
  inviting me to this function.
• Goodbye. Au revoir. Tres Bien, Merci.

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Sweet Waters Camp, Nanyuki, KENYA