MPs need to enact special laws to deal with cartels

Parliament during a past session. [File, Standard]
President Uhuru Kenyatta last week pronounced himself on the grave danger posed by cartels operating within the country, describing them as leeches sucking away the blood and sweat of hardworking Kenyans.

And because they have “illegally rigged the market”, he directed intelligence agents to look into all spaces of the country, with particular attention to cartels in public systems – budgeting, procurement and regulation.

This is, indeed, good news for Kenyans who invest in and run legal businesses.

However, one can only hope and pray that while DCI and DPP confront the cartels with existing legal tools, Parliament can take the signal from the President’s directive and enact laws or amend existing ones to address the menace of cartels in more robust ways.

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First, it must be appreciated that cartels work hand in glove with competition. So, cartels interfere with proper workings of free market enterprises by regulating competition through illegal means. And for this reason alone, cartels must not be tolerated within our economic system.

Thus, does The Competition Act of 2010 recognise cartelism as an economic crime or simply an undesired business behavior aimed at manipulating and controlling prices? The Act seemed more concerned with mergers and acquisitions, hence the creation of Competitions Authority of Kenya to police legal (or negotiated) cartels.

Without doubt, therefore, it means that all other forms of cartels operating in sugar, maize, coffee, tea, water and public transport sectors are neither recognised nor prohibited by the law. Indeed, cartelism is part and parcel of the endemic corruption.

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Second, we can learn from history that cartelism has existed for centuries and destroys individual livelihoods and businesses. A quote from Adam Smith’s An Inquiry into the Nature and Causes of the wealth of Nations, warned about the threat of cartels in the manner of “people in the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

In order to protect public interest, it is not surprising at all that the Sherman Antitrust Act of 1890 of the United States of America specifically prohibits anti-competitive agreements; and unilateral conduct that monopolises or attempts to monopolise the relevant market.

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We can borrow a leaf. CAK should invite all cartels operating in the country to seek registration of their business operations, clearly stating the socio-economic value they bring to the value chain and pay requisite fees and taxes. 

Andrew Wasike, Mombasa

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