COMPETITION LAW AND ITS HISTORY

Question 1

History of kenya’s competition

Answer 1

Colonial and post colonial:
- The competition law in Kenya originated with the price control ordinance of 1956, renamed the Price Control Act of 1956, and revised in 1972. The underlying philosophy of the Kenyan competition law has been to protect consumers against price increases. Indeed, price control has been “….central to Kenyan law…”
- In the late 1980s, the Restrictive Trade Practices, Monopolies and Price Control Act of 1988 (RTP Act) was enacted, but has been undergoing revision of late.
Reason: under pressure from escalating prices, it became clear that there was need for enhanced price controls, leading to the enactment of the Restrictive Trade Practices, Monopolies and Price Control Act (RTPMPC Act.)

1. had 6 parts
2. institution (commissioner, MoF, Tribunal, HC)
   RTPA act redress the imbalance between producers and consumers by providing a lighter touch to guarantee the protection of consumers without stifling the entrepreneur’s creative spirit
   However, Minister for Finance’s had power to fix prices in respect of goods and services provided by businesses which were deemed to be in a monopolistic position.
3. sanctions (2 /100,000///M= 3/200,000)
4. WeakenesseS: lack of autonomy/ weak implementation/ Mergers 4// lack of harmony/ no consumer welfare issues/

Question 2

function of CL (3)
objectives of the act (5)

Answer 2

1. Consumer protection
2. Redistribution-dispersal of economic power and redistribution of wealth
3. Protecting competitors

objectives of the act: s.3
1. efficiency in P,D,S
2. innovation
3, efficiency of resources
4. protect C
5. e. conducive for investment (F and L)

Question 3

ECONOMICS
1. laissex faire (3) + 3 scholars
2. capitalism (5)
3. Market economy - d (its a free market) + 6 characteristics
4.. socialism

Answer 3

1. LF: Capitalism – economic system in which the means of production are privately owned and operated for profit.
   Laissez Faire (hands off) – policy allow business to operate with little or no government interference.

scholars:
- Adam smith - invisible hand
- Malthius
- riccardo:
* High wages (Workers have more children)
* Surplus of workers (lower wages)
* Lower wages (Workers have fewer children)
* Shortage of workers (higher wages)
Believed that Laissez faire was the best cure for poverty (Malthius, Smith)

2. C:
   - Private ownership
   - Profit motive
   - Market economy
   - Competition
   - Free enterprise

3.Defined as a system where the production of goods and services are set according to the changing desires and abilities of the market players.

• Individuals are allowed to profit from private ownership of business and property. Ownership rights are not only for the government, as in a command economy.
• market players are free to produce, sell and purchase as they please, subject to government regulations.
• the market is motivated by individuals trying to sell their offerings to the higher bidder, while simultaneously attempting to pay the least for goods and services that they need ( profit motive).
• Competition is present among producers, which keeps prices fair and ensures efficient production and supply.
• Players enjoy equal access to relevant information on which to base their decisions.
• The government plays a limited role in a market economy but performs a regulatory function to ensure fair play and avoid the creation of monopolies.

4. : system in which the people rather than private individuals own all property and operate all businesses

Question 4

types of markets 2 broad ones ( 2nd has 3)

Answer 4

• Perfect competition
• Imperfect competition
  Lacks 1 or more of the 5 conditions. The types are listed below:
  1. Monopolistic competition
  Every condition except identical products.
  These firms can monopolize a small part of the market by:
   Product differentiation
   Non-price competition

2. Oligopoly
   A few control about 2/3rds of the industry ratio
   Must use interdependent behaviors
    Collusion
    Price wars
3. Monopoly
    Natural monopolies
    Legal monopolies – the government does not have a stake in it
   Examples are mining companies, printing money
    Geographic monopoly
    Technological monopoly
    Government monopoly

Question 5

competition policy v law

1. definition
2. 2 types of policies
3. kenya Policy?

Answer 5

The rational underlying competition policy is to induce suppliers to become more efficient and to offer a wider range of services at lower prices.

Government intervention is required in response to:
* Imperfection competition
* Market failure
* Monopoly behavior
Competition policy is generally applied through two different types of government intervention.

1. Behavioral intervention:
   A public authority attempts to modify market activity through regulation of a firm – or group of firms- behavior
   - Price regulation
   - Prohibition of collusive agreements
   - Interconnect requirements
2. Structural intervention
   The government actively intervenes in the market to affect the overall structure of the industry:
   - Merger and acquisition approvals
   - Structural separation
   - Divestiture

kenya:

Kenyan gov was motivated to enact the new law since it intends to use, among other things, competition policy to promote and sustain long terms economic growth, innovation and productivity as envisioned in the report entitled Kenya vision 2040: A globally competitive and prosperous Kenya (Kenya vision 2030)
The government’s economic recovery strategy for wealth and employment creation (often called ERS), was the governments initial short-term approach to the low growth phenomenon in the economy.
The ERS led to Kenya vision 2030. Which is a long-term development plan.
Vision 2030 underscores that the growth process is hinged on the healthy functioning of the domestic and external market systems. It sets out that a market-based economy, oiled by fair competition. Will be a means of facilitating growth in all sectors of the economy.
Consequently, the medium-term plan for Kenya vision 2030 committed to fast tracking the review of Kenya’s competition law.
In order to concretize the impetus behind the new legislation, the CAK developed and launched its 1st strategic plan in 2010.
The current development strategies (policies):
1. Vision 2030
In its first medium-term plan under this project, the government identified the need for a review of the country’s competition law and its institutional framework as an important part of this development agenda.
2. Big four agenda
3. Digital economy blueprint 2019
4. Post covid 19 economic recovery strategy 2020-2022
5. Africa agenda 2063
6. SDG