The Competition Tribunal in Kenya plays a crucial role in maintaining fair competition in the market. Established under the Competition Act No. 12 of 2010, this body is tasked with adjudicating disputes arising from the enforcement of competition laws. Understanding the workings of the Tribunal is essential for businesses and consumers alike.
In this article, we will explore the Tribunal's functions, structure, and significance, while also highlighting relevant keywords that will help this information reach those who need it most.
What is the Competition Tribunal?
The Competition Tribunal is a specialized court that handles cases related to competition law in Kenya. It provides a platform for resolving disputes concerning anti-competitive practices, merger approvals, and market dominance issues.
The Tribunal's establishment reflects Kenya's commitment to fostering a competitive economy, which ultimately benefits consumers through better prices, quality products, and innovation.
Legal Framework
Competition Act: The Competition Tribunal in Kenya is established under Section 71(1) of the Competition Act No. 12 of 2010, Cap 504 Laws of Kenya. The Competition Act replaced the Restrictive Trade Practices, Monopolies and Price Control Act of 1989, which had been the primary law governing competition in Kenya. The Competition Tribunal replaced the Restrictive Trade Practices Tribunal.
Competition Tribunal (Procedure) Rules: The rules governing the procedure of the tribunal.
Key Functions of the Competition Tribunal
Adjudicating Disputes: The Tribunal hears cases brought before it regarding anti-competitive agreements, abuse of dominant market position, and other related issues.
Reviewing Decisions: It has the authority to review decisions made by the Competition Authority of Kenya (CAK). This includes decisions on mergers, acquisitions, and market practices.
Imposing Penalties: The Tribunal can impose fines and other penalties on businesses found to be in violation of competition laws.
Promoting Awareness: The Tribunal plays a vital role in educating the public and businesses about competition laws and their importance.
Structure of the Competition Tribunal
The Tribunal is composed of members appointed by the President of Kenya. It typically consists of legal experts, economists, and individuals with experience in competition law.
This diverse composition ensures that decisions are well-informed and balanced.
Chairperson: Usually an individual with similar qualifications as a judge with experience in commercial law.
Members: Comprised of legal experts, economists, and industry specialists.
Terms of Service
Members of the Tribunal serve for a specified term, which can be renewed. This ensures that the Tribunal remains equipped with current knowledge and practices in competition law.
How to Approach the Competition Tribunal
Filing a Complaint
If you believe that a business is engaging in anti-competitive practices, you can file a complaint with the CAK. The CAK will investigate the matter, and if it finds merit in the complaint, it may refer the case to the Tribunal.
Steps to File a Complaint:
Gather Evidence: Compile all necessary documents and evidence to support your claim.
Submit a Written Complaint: File your complaint with the CAK, detailing the nature of the anti-competitive behavior.
Await Investigation: The CAK will investigate the matter and may refer it to the Tribunal if warranted.
Appealing a Decision
If you disagree with a decision made by the CAK, you have the right to appeal to the Competition Tribunal. This involves submitting a formal appeal within a specified timeframe.
Landmark Cases
The Competition Tribunal has presided over several landmark cases that have significantly influenced competition law in Kenya. Here are some notable examples:
In Makini School Limited v Competition Authority of Kenya (Tribunal Case 011 of 2021) [2023] KECT 466 (KLR) (29 August 2023) (Judgment), the Competition Tribunal delivered a judgment on August 29, 2023. This case involved an appeal by Makini School Limited against a decision made by the Competition Authority of Kenya (CAK).
Background
Parties Involved: Makini School Limited (Appellant) and the Competition Authority of Kenya (Respondent).
Issue: The appeal was centered around a fine imposed by the CAK on Makini School Limited for breaching acquisition laws under the Competition Act and whether students and the teachers of a school were assets capable of being acquired within the meaning of section 2 of the Competition Act
Key Points of the Case
Acquisition Details
Makini School Limited was involved in a controversial acquisition by two foreign firms. The CAK found that the acquisition did not comply with the necessary legal requirements.
CAK’s Decision
The CAK imposed a fine of Ksh 7.2 million on Makini School Limited for the breach. The decision was based on the school’s failure to adhere to the stipulated acquisition laws.
Appeal
Makini School Limited appealed the CAK’s decision, arguing that the fine was excessive and the acquisition was conducted in good faith. The appeal was filed with the Competition Tribunal, seeking a review and reversal of the CAK’s decision.
Tribunal’s Ruling
The Competition Tribunal upheld the CAK’s decision, affirming the fine of Ksh 7.2 million. It held that Students and the teachers of a school were assets capable of being acquired within the meaning of section 2 of the Competition Act
The Tribunal emphasized the importance of compliance with competition laws to ensure fair market practices.The ruling highlighted that the conditions imposed by the CAK were necessary to prevent any anti-competitive effects resulting from the acquisition
In Standard Group Plc v Competition Authority of Kenya [2021] eKLR, the Standard Group Plc appealed against a decision made by the Competition Authority of Kenya (CAK). The case revolved around the acquisition of two regional newspaper brands, Mount Kenya Star Newspaper and Pambazuko Swahili Newspaper, by the Standard Group Plc.
Key Points of the Case
Background
On August 17, 2018, Standard Group Plc resolved to purchase the two newspaper brands. The acquisition was intended to expand the company’s market reach and diversify its media offerings.
CAK’s Decision:
The CAK reviewed the acquisition and raised concerns about its potential impact on competition within the regional newspaper market. The CAK’s decision included conditions that Standard Group Plc needed to meet to proceed with the acquisition.
Appeal
Standard Group Plc appealed the CAK’s decision, arguing that the conditions imposed were unreasonable and would hinder the acquisition’s benefits. The appeal was filed with the Competition Tribunal, seeking a review and reversal of the CAK’s decision.
Tribunal’s Ruling:
The Competition Tribunal reviewed the appeal and the arguments presented by both parties. The Tribunal upheld the CAK’s decision, emphasizing the importance of maintaining fair competition in the market.
The Tribunal found that the conditions imposed by the CAK were necessary to prevent any anti-competitive effects resulting from the acquisition.
Significance
This case highlights the role of the Competition Tribunal in ensuring that mergers and acquisitions do not harm market competition. It underscores the importance of regulatory oversight in maintaining a fair and competitive market environment in Kenya.
For businesses and legal professionals, this case serves as a reminder of the rigorous scrutiny that acquisitions can undergo and the need to comply with competition laws and regulations.
In the case of Majid Al Futtaim Hypermarkets Limited v Competition Authority of Kenya & another [2021] eKLR, the Competition Tribunal addressed allegations of abuse of buyer power by Majid Al Futtaim Hypermarkets Limited, operating under the Carrefour brand.
Background
Parties Involved: Majid Al Futtaim Hypermarkets Limited (Appellant) and the Competition Authority of Kenya (CAK) (Respondent).
Issue: The case centered on allegations that Carrefour abused its buyer power over its suppliers, particularly Orchards Limited.
Key Points of the Case
Allegations
The CAK accused Carrefour of engaging in practices that constituted abuse of buyer power. These practices included demanding rebates, returning goods close to their expiry dates, and refusing to accept deliveries without justifiable reasons.
CAK’s Decision
The CAK found Carrefour guilty of abusing its buyer power and imposed a fine. The decision was based on evidence that Carrefour’s practices were detrimental to its suppliers, particularly small and medium-sized enterprises (SMEs).
Appeal
Carrefour appealed the CAK’s decision, arguing that the imposed conditions were unfair and that they were not given a fair hearing. They also contended that the CAK’s guidelines on buyer power were not legally binding.
Tribunal’s Ruling:
The Competition Tribunal upheld the CAK’s decision, affirming that Carrefour had indeed abused its buyer power. The Tribunal emphasized the importance of protecting suppliers from unfair practices by dominant buyers.
The Tribunal also ruled that the CAK’s guidelines on buyer power were valid and applicable.
In the case of East African Tea Trade Association v Competition Authority of Kenya [2020] eKLR, the Competition Tribunal addressed issues related to anti-competitive practices within the tea trade industry.
Background
Parties Involved: East African Tea Trade Association (EATTA) (Appellant) and the Competition Authority of Kenya (CAK) (Respondent).
Issue: The case centered on allegations that EATTA engaged in practices that contravened the Competition Act, specifically regarding price fixing and market allocation.
Key Points of the Case
Allegations
The CAK initiated a Special Compliance Process (SCP) to investigate the compliance of trade associations with competition laws. EATTA was accused of setting broker fees and commissions, which the CAK deemed as price fixing.
CAK’s Decision
The CAK found that EATTA’s practices were in violation of Section 22(1)(b) of the Competition Act, which prohibits price fixing. The CAK’s decision included directives for EATTA to cease such practices and comply with competition laws.
Appeal
EATTA appealed the CAK’s decision, arguing that the setting of broker fees was necessary for the orderly conduct of the tea auction and did not harm competition. The appeal was filed with the Competition Tribunal, seeking a review and reversal of the CAK’s decision.
Tribunal’s Ruling
The Competition Tribunal upheld the CAK’s decision, affirming that EATTA’s practices constituted price fixing and were detrimental to competition. The Tribunal emphasized the importance of compliance with competition laws to ensure fair market practices.
In the case of Telkom Kenya Limited & another v Competition Authority of Kenya [2020] eKLR, the Competition Tribunal made a significant ruling regarding the merger between Telkom Kenya and Airtel Kenya. Here’s a summary of the key points:
Background
Parties Involved: Telkom Kenya Limited and Airtel Networks Kenya Limited sought to merge their operations.
Regulatory Body: The Competition Authority of Kenya (CAK) initially approved the merger but imposed several conditions aimed at preventing anti-competitive practices.
Conditions Imposed by CAK
The CAK imposed eight conditions on the merger, including:
Spectrum Licenses: The merged entity could not sell or transfer its existing operating and frequency spectrum licenses.
Spectrum Return: Spectrum licenses held by Telkom Kenya were to be returned upon expiry.
Business Disposal: The merged entity was restricted from disposing of any part of its business for five years.
Government Contracts: The merged entity had to honor existing contracts with government bodies.
Fibre Access: Access to fibre managed by Telkom on behalf of the Government of Kenya was to be at non-preferential market rates.
Employee Retention: At least 349 of Telkom Kenya’s 674 employees were to be retained for at least two years.
Annual Reports: The merged entity had to submit annual reports to the CAK.
Tribunal’s Decision
Appeal: Telkom Kenya and Airtel Kenya appealed against the conditions, arguing that they were overly restrictive and not justified by competition law concerns. in their ruling, the Tribunal overturned or modified most of the conditions:-
Spectrum-Related Conditions: Conditions related to spectrum licenses were removed entirely, as the Tribunal found that the Communications Authority of Kenya (CA) was the appropriate body to handle spectrum management.
Employee Retention: The condition to retain employees was upheld but limited to a two-year period.
Other Conditions: Several other conditions were either overturned or modified to be less restrictive.
Significance
Precedent: This ruling set a precedent for the Tribunal’s willingness to scrutinize CAK’s decisions and highlighted the importance of sector-specific regulators in managing industry-specific issues.
Impact on Merger Control: The decision underscored the need for balanced regulatory oversight that does not unduly hinder business operations while ensuring fair competition.
Importance of the Competition Tribunal
Economic Growth
A fair competition environment promotes economic growth. By regulating monopolistic practices, the Tribunal ensures that small and medium enterprises can thrive alongside larger corporations.
Consumer Protection
The Tribunal plays a pivotal role in protecting consumer interests. By discouraging anti-competitive practices, consumers benefit from better pricing, improved quality, and increased choices.
Innovation and Development
In a competitive market, businesses are incentivized to innovate and develop new products. The Tribunal's efforts to regulate market behavior encourage companies to invest in research and development.
Recent Developments
In recent years, the Competition Tribunal has made significant strides in enhancing its effectiveness. Initiatives to improve transparency and efficiency have been implemented, making it easier for businesses and consumers to engage with the Tribunal.
Challenges and Future Outlook
Despite its successes, the Competition Tribunal faces several challenges. These include limited resources, lengthy adjudication processes, and the complexity of cases. However, the Tribunal is continually working to improve its efficiency and effectiveness.
Looking ahead, the Tribunal aims to enhance its capacity through digital transformation and increased stakeholder engagement. This will enable it to handle more cases promptly and effectively, further promoting fair competition in Kenya.
FAQs about the Competition Tribunal
1. What types of cases does the Competition Tribunal handle?
The Tribunal handles cases related to anti-competitive practices, merger reviews, and abuse of dominant market position.
2. How can I file a complaint with the Competition Tribunal?
Complaints should first be filed with the Competition Authority of Kenya, which may refer the case to the Tribunal if necessary.
3. Can I appeal a decision made by the Tribunal?
Yes, you can appeal a decision within a specified timeframe, as outlined in the Tribunal's rules.
Conclusion
The Competition Tribunal in Kenya is an essential institution that plays a critical role in ensuring fair competition in the marketplace. Its functions range from adjudicating disputes to imposing penalties on offenders, thus safeguarding the interests of consumers and businesses alike.
By fostering a competitive environment, the Tribunal contributes significantly to economic growth and innovation in the country. For more information on the Competition Tribunal and how it may affect your business, feel free to contact our law firm. We specialize in competition law and are here to assist you with your legal needs.
To learn more, please visit the Competition Tribunal Website.
