The East African Community Competition Authority (EACCA) will be operational from July with a mandate to curb unfair trade practices in the region and protect consumers from substandard goods.
The authority will restrict trade practices and transactions that unduly limit fair competition.
“The EACCA will commence operations in the 2016/2017 financial year and will act as a one-stop-centre in the enforcement of its provisions,” said Tanzania’s Deputy Minister for Foreign Affairs and East African Co-operation Susan Kolimba.
Dr Kolimba said the Council of Ministers has appointed commissioners and a secretariat who are working on the modalities of EACCA operations.
The East African Legislative Assembly approved $587,565 for the authority.
In 2015, the EAC Council of Ministers adopted the East African Community Competition (Amendment) Bill, which provided for the establishment of the EACCA. The authority has jurisdiction in all the five partner states, while South Sudan will be covered at a later stage, as it is not fully integrated into the EAC.
The EAC Competition Act, 2006, among other things, seeks to allow consumers to take class action against goods or services providers. It also seeks to seal loopholes that enable trade associations and firms operating across the region to engage in exclusive agreements, or form cartels, forcing consumers to pay higher prices for goods and services.
Trade specialists say that while some EAC partner states have enacted national competition acts, these laws have proved inadequate to deal with cross-border and multi-jurisdictional competition cases.
National competition laws and regulations are limited to political boundaries because they do not have extended powers to regulate company activities across borders.
East African Business Council economist Adrian Njau said as cross-border trade grows, a regional competition law becomes crucial to check unfair trade practices.
“Without a regional competition law, monopolies or firms with a large market share can easily abuse their market dominance by engaging in price fixing, sharing of markets or compromising on quality to the detriment of consumers,” Mr Njau told The EastAfrican.
Whereas critics of competition regulation say it should not apply in a free market because it distorts the essence of the concept, Mr Njau said the rules are applied even in more advanced capitalist states and economic regions such as the European Union and the US.
He added that the EACCA will level the playing field for big and small companies and enable them to compete in a fair manner.
The EAC entered into a Customs Union in 2005 and started the implementation of the Common Market Protocol in July 2010. As a result, competition within the region has intensified.
A fair, competitive market would mean more choices, better quality and lower-priced products for consumers, and easier market access for new firms.
Moreover, it would mean that measures would be put in place to curb dominance, market sharing, and concentrated mergers and acquisitions by firms with substantial market share.