Competition Law- A body of legislations intended to prevent market distortion caused by anti-
competitive practices.
Market - is a mechanism that brings together business players i.e. buyers and sellers
Anti-competitive practices- are practices that distort free and fair market, these include. An anti-
competitive practice is viable attempt to prevent or reduce competition in a market. E. g Price
fixing, mergers and acquisitions, regulations
Roles of Commercial law
- Seeks to maintain competition by regulating anti- competitive practices
- ensure that business that in open competitive market
-protects the consumer from exploitation by businessmen
As per Section 4 of The Competition Acti, Competition is competition in a market in Kenya and
refers to the process whereby two or more persons supply or attempt to supply, acquire or
attempt to acquire from the people in that market or substitutable goods or services.
Development of Policy of Free and Fair Competition in Kenya
1956-Enactment of price control ordinance that was later renamed price Control Act
1972-Revision of the Price Control Act
In mid-seventies, government allowed import competition into the domestic market on quota
basis.
In 1988,there was enactment of Restrictive Trade Practices, Monopolies and Price Control Act
Objectives of RTPMPC
Control the escalating prices of goods that resulted from monopolization and restrictive trade
practices
Examples of restrictive trade practices include; discrimination in supplies, collusive tendering
and price fixing.
Monopolies included; Mergers and Take-overs
Between 1980 and 1998, there was the establishment of the Monopolies and Price Commission
to regulate mergers and prices.
There was continued application of the Act until 2010 when the Competition Act came into
force.
Elements of Competition Law
There are three main elements of competition law, they include;
1. Agreement between enterprises- competition law regulates and prohibits agreement and
practices that may hinder free and fair trade. E.g. Collusion of enterprises and formation
of cartels.
2. Monopolization- Having a complete or total control over a market by a single firm or
having complete domination of the market by a single firm. This law works to prevent
domination by a company or a firm in the market. Monopolization maybe because of
market power, exclusionary conduct or business justification.
3. Mergers and acquisition-A merger/ amalgamation is the combination of two or more
companies into one. Acquisition is where one company is taken over by another. The law
supervises aspects of acquisitions and mergers.
Competition Act (2010)
(1) Objectives S.3
Protect consumer from price increases (it was used to regulate prices of basic
commodities)
Increase efficiency in the production, distribution and supply of goods and
services
Promote innovation
Maximize the efficient allocation of resources
Create an environment conducive for investment both foreign and local
Protect consumers; Art 46
Capture national obligations in Competition matters with respect to regional
integration initiatives
(2) General Features of Administration and Process
The act regulates a set of potentially anticompetitive behaviors and creates 2 institutions to
enforce its powers.
1. Competition Authority
Est under s. 7 as an independent body
Functions s.9
- promoting and enforcing the act
- investigating complaints and impediments
- promoting public knowledge of the act
- studying gov’t policies and legislations that may affect competition
- advising the gov’t on matters relating to competition.
2. Competition Tribunal
Est in S.71
- hearing appeals from the authority
(3) Consumer Welfare
Established under part VI of the act.
Enforces article 46 of the constitution (consumer rights)
(4) Unwarranted concentration of economic powers(part V)
“unwarranted concentration of economic power” means the existence
of cross directorship between two distinct undertakings or companies producing
substantially similar goods or services and whose combined market share is
more than forty per cent.
Unwarranted concentration of economic power is deemed to be prejudicial to the public interest
in the following ways; ( s. 50)
(a) unreasonably increase the cost relating to the production, supply, or
distribution of goods or the provision of any service; or
(b) unreasonably increase—
(i) the price at which goods are sold; or
(ii) the profits derived from the production, supply or distribution of
goods or from the performance of any service; or
(c) lessen, distort, prevent or limit competition in the production, supply
or distribution of any goods (including their sale or purchase) or the
provision of any service;
(d) result in a deterioration in the quality of any goods or in the
performance of any service; or
(e) result in an inadequacy in the production, supply or distribution of any
goods or services.
i
No 12 of 2010
