Patrick Okilangole, the Board Chairman of the COMESA Competition Commission has pointed out protectionist policies exercised within the COMESA region as a key constraint faced by Member States vying to enforce competition rules in their national markets which also affect the regional competition regime.
He says this has continued to be the biggest blade to COMESA Member States economies as protectionist policies remain up to date embodied in economic policies carried out by the majority of the Member States.
“These negative policies manifest themselves in several ways which include ineffective competition policy frameworks, unjustified and discretionary exemptions, for example, utilities managed by the state in key economic sectors and lack of sufficient investigative powers and tools in the current national and regional legislation to deter anticompetitive behaviour.
“Lack of independence in decision making since competition agencies report to and their decisions may be vetoed by a ministry, and significant government intervention in markets such as price controls in potentially competitive markets, controlling essential products, margins, and geographic areas,” said Okilangole during the sixth COMESA regional sensitization workshop for Business Reporters held in Nairobi Kenya.
Okilangole said poor market practices and regulations are witnessed in the COMESA region which hinder competition.
He mentioned firm collusion, market foreclosure, and discrimination against new entrants—practices which also limit firms’ competitiveness and affordability of key consumer goods.
“Self-regulation imposed by business associations, particularly in the service sectors, lessens competition by either restricting entry or aiding members in coordinating prices.
“Horizontal price agreements such as price-fixing, market sharing and bid-rigging are among the most common anti-competitive practices in the Common Market,” stressed Okilangole.
Okilangole added that COMESA Member States still harbour rules which prohibit competitive access to essential business services. He said these services facilitate the entry and expansion of young firms.
“For example, excessive license requirements relating to essential local business services such as banking and related financial services, communications, transport and required energy services,” he said.
George K. Lipimile the COMESA Competition Commission Director and Chief Executive Officer discussed the competitive realities of the modern business environment where he highlighted the state of the competition environment in the Common Market and the quest to enhance the creation of competition culture.
He said the purpose of competition law is to protect and promote the competitive process, so as to promote economic efficiency, thereby generating lower prices, better products, Increased choice and thus enhancing the welfare of the general community.
To achieve this goal, Lipimile said competition law must be enforced effectively at both the national and regional level. He added that competition law is not concerned with protecting particular competitors in the market but competitive markets provide a strong incentive for achieving economic efficiency.
“Competitive markets ensure economic efficiency that goods that the consumers want are produced using the most efficient production methods, are marketed and distributed to the consumers who wish to purchase them in the most efficient means possible; and are using the most appropriate and superior technology,” said Lipimile.
He said competition rules tackle the creation and strengthening of market power, which Market power is often associated with creating barriers to entry.
Lipimile said that when fewer people have resources to enter markets, it leads to inequality, and inequality leads to poorer economic performance, including lower growth and more instability.
“Competitive markets are more likely to provide the poor with opportunities to be employed or to start their own small business,” he said.
Lipimile also talked about the challenges that are faced by developing countries in the implementation of Competition Laws as the lack of adequate financial and human resources for effective operationalization of the competition authorities in Member States, low political will to implement competition rules, lack of awareness among key stakeholders (businesses, consumers, governments) on the importance of competitive markets and competition principles not integrated into broader government goals and policies.
BY PAUL TENTENA