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"speaker_name": "Mr. Sungu",
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"content": "Mr. Deputy Speaker, Sir, there is also the unwarranted concentration of economic power in the hands of very few Kenyans, which is prejudicial to the public interest. This could result in rise in services costs and prices of commodities. It will also lead to reduction or limitation of competition, leading to deterioration in the quality of goods and services. Of major concern to us is the control of shareholding in strategic industries, particularly in public listed companies. We know for certain that Telkom Kenya and Safaricom Limited are going to be on the market for sale. If we are to have a proper law in place, it will mean that this kind of enterprise, which is strategic in nature, will not be allowed to be dominated by a few people. I will now turn to the question of mergers and acquisitions. If we were to create a competition authority, the authority would ensure that mergers and acquisitions are not done against the public interest. The authority will be forced, or enabled under the proposed law, to establish criteria for allowing mergers and acquisitions. This would include productivity, competitiveness and employment creation potential. That would be, for instance, enhancement of capital intensiveness as opposed to labour-intensive technology, which would create employment for Kenyans. Mr. Deputy Speaker, Sir, when implementing mergers, we should also consider the community dimension. We must look for ways and means by which we can prevent anybody from creating a dominant position in a distinct market, thereby affecting competition. We must also protect the public interest by protecting public security, the plurality of the media and enterprises that are distinct. We must also control the ways and means in which the share of, or supply to, the market is dominated by a few people, which lessens competition. Since 1990, we have had several mergers and acquisitions in Kenya. In 1997, we had 11 cases, while in 1998 we had 23 cases and in 1999, we had 24. As we know, this could have been caused by the poor state of the economy, leading to a combination of resources by some firms. August 15, 2007 PARLIAMENTARY DEBATES 3185 Another factor which contributed to this was, of course, the introduction of some legal requirements by Parliament. In the case of banks, Parliament made a law which raised the legal minimum capital base to Kshs500,000. We know that, currently, the minimum limit is Kshs1 billion. Mr. Deputy Speaker, Sir, this can also result in discrimination against other people, who may not have that kind of money, and prevent them from entering the market. We already see signs of a few individuals owning the major share in the financial sector, especially in banks, et cetera, against the interest of the entire Kenyan community. You will note that most of the emerging banks today are owned by people from specific areas of this country. The proposed new law will also consider cross-border issues. Currently, the law does not address the issue of cross-border abuses and extra-territorial jurisdiction. Of course, given the authority by Parliament, the new law will take cognizance of Article 78 of the Treaty for the Establishment of the East African Community, which binds the three member States to prevent restriction or distortion of competition within the Community. The Bill will address issues flowing from the COMESA Treaty and other bilateral trade agreements. It will also encourage Kenyans to take advantage of cross-border opportunities like the AGOA, or business opportunities in Southern Sudan and elsewhere. Mr. Deputy Speaker, Sir, the proposed Bill will aim at promoting a competitive culture in this country. As Parliament, we must encourage the emergence of a competitive culture and address the issue of collaborative approach to business, which tends to work against the consumer. This will be in line with the current Government policy, which has led to the creation of regulatory bodies in the energy sector, among which is the Petroleum Development Authority. The proposed competition authority will legally be enabled to build partnerships, disseminate information to the public, promote consumerism, create consumer choice for goods and services, allow natural market forces to operate freely and discourage vertical and horizontal domination of the markets by a few people. Monopolisation and collusive behaviour between firms lead to the practice of price-fixing, price discrimination, exclusive dealings, market allocation and mergers, which reduce market competition, among others. These actions prevent consumers from choosing the best prices that would otherwise have been available to them. The consolidation of ownership of a few powerful firms in particular sectors of the economy is not in the interest of this country. Let us take the example of the East African Cables Company. A group of people came together immediately the current Government came to power and bought the East African Cables Company. We should know who these people are, because they are the same people who are given directorships in the Kenya Power and Lighting Company and the Kenya Electricity Generation (KenGen) Company. So, there is some kind of \"cross-pollination\" in terms of price fixing and so on. This is what we mean by \"horizontal integration of companies\", so that they inter-lock directorships. This can also lead to vertical issues. For example, there can be owning of firms vertically, down the operation chain, including suppliers and distributors and eventually lead to customers not enjoying the right price. Mr. Deputy Speaker, Sir, we very well remember issues relating to insider-trading at Uchumi Supermarkets which, eventually, led to its collapse. We know for sure that one individual, who was a former Managing Director (MD) of KENATCO and who brought it down, was the same individual who became a major shareholder in Uchumi Supermarkets. He has been accused of insider-trading. He conveniently skipped the coach when he knew that the firm was going to collapse. That is against the interests of Kenyans who, in fact, need to be protected by this Parliament. Mr. Deputy Speaker, Sir, it is important and imperative upon us, as a Parliament, to take 3186 PARLIAMENTARY DEBATES August 15, 2007 some of these issues seriously. As we sit here in this Parliament, Kenyans are suffering. The economy of this country, despite the reputed 10 per cent or whatever growth rate it is having, is now going to be in the hands of a few people. We need a law to ensure that Kenyans are protected, so that we could reduce collusion among a few people. That way, there will be no price fixing and other Kenyans will also have a right in the sharing of the national economy. I hope that I have opened the matter for debate. This is a very important matter. I am sure that there are only a few Members here. With those few remarks, I beg to move and ask my brother, Capt. Nakitare, to second this Motion."
}