Monday, March 4, 2024
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Gov’t Tables Bill Seeking to Promote Fair Competition In Enterprises


David Bahati, the State Minister for Industry.

Government has tabled before parliament the Competition Bill, 2022 seeking to promote fair competition between enterprises and leave the market unbound by the manipulation of stronger trading enterprises.

“The primary goal of the Bill is to control anti-competitive behaviour of firms that has a negative impact on competition in Uganda’s market. Furthermore, the Bill seeks to encourage and maintain market competition, safeguard the interests of consumers, and safeguard market freedom in the markets in Uganda,” reads part of the Bill.

David Bahati, the Minister of State for Industry says that some of the activities the Bill seeks to regulate are anti-competitive agreements, abuse of dominance, mergers, and acquisitions.

Currently, Uganda has no specific law that controls anti-competitive behaviour of firms in the markets but a few sectors like banking and energy have competition provisions in the laws regulating them.

“Such provisions are restricted to those sectors and are not comprehensive enough for the purposes of competition law, the Bill seeks to provide a comprehensive set of principles to regulate competition in all sectors,” Bahati says.

Clause 8 (1) of the Bill prohibits a person to enter into any agreement or take any decision, engage in any concerted action or practice, in respect of production, supply, distribution, acquisition or control of goods, provision of services, which causes or likely to cause an adverse effect on competition in the market.

“An agreement, decision, concerted action or practice has an adverse effect on competition where that agreement, decision, concerted action or practice directly or indirectly fixes purchase or selling practice, limits or controls production supply, markets, technical development or investment; shares markets or sources of production, supply by territory type, size of customer; directly or indirectly results in bid-rigging or collusive tendering,” reads part of the Bill.

The Bill also prohibits an enterprise to abuse its dominant position under Clause 10 (1).

According to the Bill, a dominant position means a point of economic strength enjoyed by an enterprise individually or collectively which gives it the power to behave independently of its competitors, customers and consumers and in particular to foreclose any other enterprise from competing in the relevant market.

The Bill provides that an enterprise holding a dominant position in the relevant market shall not impose unfairly high or unfairly low purchasing prices or unfair trading conditions, limit production or technical development and innovation to the prejudice of consumers or discriminate between consumers or suppliers on the basis of non-commercial criteria, including nationality or place of residence.

“An enterprise holding a dominant position shall not engage in practices that excludes competitors from the market like predatory pricing, price squeezing, cross-subsidisation, refusal to deal, refusal of access to an essential facility, tying arrangements and unjustifiable discrimination among customers or supplies,” further reads the Bill tabled by Bahati.

Abuse of a dominant position may lead to discontinuation of the agreement, payment of a fine not exceeding 10 percent of the average of the turnover for the last three years of each enterprise, awarding compensation to an aggrieved party, among others.

For mergers, acquisition and joint ventures, the Bill requires an enterprise that seeks to enter into such agreement to give notice to the Ministry and in a form prescribed by regulations issued by the Minister. Mergers, acquisition and joint ventures entered into in contravention of the proposed provision will be void.

The proposed law provides a penalty on conviction of 2 million Shillings or imprisonment not exceeding 4 years or both to an enterprise which is required to give notice of a merger, acquisition or joint venture but fails to do so.

Submission of false statements or omission of material is an offence and attracts a fine of 5 million Shillings or imprisonment not exceeding 10 years.

Failure to pay fines provided under the proposed law by an enterprise or individual is an offence and liable on conviction to a fine not exceeding 80 million Shillings or imprisonment not exceeding 5 years or both.

However, the Bill does not apply to practice or agreements arising out of any obligation assumed by Uganda under any treaty or international agreement, any person or enterprise performing a sovereign function on behalf of government or to those exempted by a Minister.

Thomas Tayebwa, the Deputy Speaker of Parliament referred the Bill to the committee on Trade, Tourism and Industry for consideration and report back to parliament.


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