HTTP 200 OK
Allow: GET, PUT, PATCH, DELETE, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept
{
"id": 208541,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/208541/?format=api",
"text_counter": 181,
"type": "speech",
"speaker_name": "Mr. Munya",
"speaker_title": "The Assistant Minister, Office of the President",
"speaker": {
"id": 279,
"legal_name": "Joseph Konzolo Munyao",
"slug": "joseph-munyao"
},
"content": " Thank you, Mr. Temporary 3194 PARLIAMENTARY DEBATES August 15, 2007 Deputy Speaker, Sir, for giving me this opportunity to support this very important Motion. We have different forms of economies. We have command economies, where prices are controlled by the Government or agencies that are set up by the Government to control prices. In those kinds of economies, you may not need competition laws, because already there are institutions that are in place which determine what is value for money when you are buying products. But in a liberalised economy, like ours, where prices are left to be fixed by the market forces, if the Government does not have a law that can control firms, then the consumers are left at the mercy of firms that are running the market, especially in a developing country like ours, where we do not have very many companies operating in the same area, where they can compete on their own and prices are left to be set by the market forces. So, you will have the firms themselves controlling the market, abusing their market power and, therefore, making the consumer suffer. Probably, this is the step we missed when we were liberalising our economy. We did not envisage a situation where companies would come together. Even if it is several companies, they can still abuse the market, because all that they need to do is agree at what level to fix prices. Once they are agree on what level to fix prices, then the consumer suffers all the time. Since there is nobody else to compete with them, obviously, the consumer is forced to buy services at a price he cannot afford, but because he has no alternative, he has to buy them at that price. That is what is obtaining in the mobile industry right now, because we have very few players. You will see them talking when they are marketing and trying to compete at the marketing level, targeting the customers. However, in terms of pricing, they become a cartel and the consumer suffers. So, that is why this Motion is very timely, so that we can have a law that takes care of a situation where the firms are very few, maybe two, three or four, and where they collude to set prices that are unfair to consumers. In that situation, a body is set up to investigate those situations where there is collusion in pricing, and make sure that market forces operate in such a way that monopolies, or oligopolies, do not abuse the market and cause the consumer to suffer. Mr. Temporary Deputy Speaker, Sir, the other important issue in which a competition law would help is where companies are trying to merge. In industrialised countries where there is competition law, if you do not have many companies providing a service, the law provides that you cannot be allowed to merge. This is so because if you merge, then you become a monopoly and you are left to abuse the market control that you have at the expense of the consumer. In Kenya, when the Kenya Breweries Limited (KBL) and the South African Breweries Limited (SABL) that was operating here were merging and giving each other markets in the region, basically what they were doing was forming a cartel in the region. They realised that they were the two of them and they could decide what to do with the consumers and, therefore, reap maximum profits from the consumer. In Europe, where a proper competition law operates, that merger could never have been allowed, because there were only two companies. If you allow them to merge, basically you are saying that the beer consumer would always be at the mercy of the one company that was left in Kenya. That is why you can see that the pricing of beer is always going up. When the competitor came and settled here, prices were going down but now it is only one company operating. So, that was a disaster which was allowed to take place at that time. But we were told that there were investors who were part of the game that was taking place, who wanted it to happen that way. However, if we had a law to control such issues, that merger could never have taken place, and we would have had those two companies competing at the market and consumers would have been getting value for their money. Other issues that a competition law would help with, that I have already talked about, are like artificial fixing of prices. The competition law would take care of that, so that market forces operate properly and consumers buy goods and services at the level of the value they are paying for. Also where there is no competition law, usually there is no incentive to improve the quality of August 15, 2007 PARLIAMENTARY DEBATES 3195 products. The quality of products is not taken care of, because, after all, I will sell. I am the only one, or there are only two of us! So, there is no incentive for companies to improve the quality of the goods they have to compete in the market, because there is no competition law. That is why we need that law, so that we can have the best quality of products that we can have. Every fellow, or company, in the market will know that if their products are not good they cannot attract customers. But where you let them collude and agree, they become cartels and the issue of the quality of products also arises. Mr. Temporary Deputy Speaker, Sir, the competition law will also spur expansion of industries. Where you have a proper law regulating the companies that are operating, you will also spur expansion of industries, and this will be good for our economy. So, it is a very important law, not just for purposes of taking care of the consumer but also for purposes of economy growth of our country, that is already taking off. We need that law that will regulate the industry. In a capitalist system, companies are driven by profit; their motive is profit. It is not the value of what the consumer gets, or even the quality of the products, but the profit. So, if we do not have intervention measures that ensure that other social needs are also taken care of, we are in a very dangerous situation. That is why we need that law to take care of that, so that companies do not abuse their power of market control. Mr. Temporary Deputy Speaker, Sir, competition laws will provide protection for small players. In most cases, what major companies do is to collude to make sure that they kick out the small companies that have no capacity or money to operate in the market. The major firms can even put their prices artificially so low and decide that in five years, they will not be making any profits to make sure that the small companies \"die\"! That is what they do if they are not controlled. We need a competition law to ensure that the big giants do not throw out the small operators from the market by keeping their prices artificially low for some time to put small companies out of business, and then bring the prices back to normal. That is what they do. They use any means to make sure that nobody else comes into the market. We need that law to take care of those small players. Mr. Temporary Deputy Speaker, Sir, we need the competition law not just to take care of small players, but also to make sure that there are certain restricted areas where firms are not allowed to operate. In some European countries, for example, if a firm is involved in big manufacturing, it is not allowed to participate in transport business. There is a law that prohibits, for example, East Africa Industries--- Is it still called East Africa Industries? What is it called now? It is not called East Africa Industries any more!"
}