The EAC Competition Act, 2006 (the Act) prohibit certain anticompetitive business practices if that practice has, or is intended to have, an anti-competitive effect in the relevant market and affect trade between Partner States. The prohibitions are set out in Part II of the Act, with the objective of maintaining competition in the EAC Common Market and as a means to enhancing intra-regional trade, protecting consumer welfare and ensuring efficient allocation of resources in the Community.
A restrictive trade practice is an act performed against competitors with the effect of reducing or eliminating their opportunities to participate in a market. It is also an act by suppliers to reduce or eliminate the ability of consumers to access desired goods or services.
The Act prohibits concerted and unilateral agreements and/or practices, and decisions by association of undertakings, which may affect trade between Partner States and have as their object or effect the prevention, restriction or distortion of competition within the EAC market.
The concerted practices between competitors are the most harmful forms of anti-competitive conducts under Part II of the Act, as they constitute hard-core cartels. A person who contravenes this section commits an offence and shall be liable to a fine.
Examples of the types of business arrangements which are generally prohibited under part II of the Act include:
- collusion by competitors to fix prices;
- collusive tendering and bid rigging;
- collusive market or customer allocation;
- quantitative restraints on investment, input, output or sales;
- barring competitors from access to the market or from access to an association or arrangement which is essential for competition; and
- concerted practice restricting movement of goods within the Community.
Abuse of a dominant market position
Part III of the Act, prohibits any abuse by one or more firms of a dominant position within the EAC Common Market or in a substantial part of the Community in so far as it may affect trade between Partner States. Dominance per se is not bad, but it is the abuse of that dominant position that is prohibited as it may restrict or deter competition in the market.
Examples of behaviour that could amount to an abuse by an undertaking of its dominant position include:
- imposing unfairly high selling or unfairly low purchasing prices or other unfair trading conditions;
- limiting production or technical development and innovation to the prejudice of consumers;
- discriminating between consumers or suppliers according to non-commercial criteria such as nationality or residence
- predatory practices;
- refusal to deal;
- refusal of access to an essential facility;
- tying arrangements; and
- Unjustifiably discriminating among customers or suppliers.
Section 6 of the Act empowers the Authority to exempt categories of concerted practice, which lead to an improvement of production or distribution and whose beneficial effect out weight its negative effect on competition. The Act also exempts practices which include joint research and development; specialization of production or distribution; and, standardization of products or services.