A successful market economy requires, among other things, effective competition and consumer protection policies. Each naturally complements the other and serves to advance economic efficiency, consumer choice and welfare, and overall economic growth and development. Competition forces producers to offer the most attractive arrays of price and quality options in response to consumer demand. When consumers dislike the offerings of one seller, they can turn to others. This ability to shift expenditures – that is, to “spend one’s money elsewhere” – imposes a rigorous discipline on each seller to satisfy consumer preferences.
Free markets do not automatically create competitive environments. Like competition on a playing field in any sport, a clear set of enforceable rules must prevent cheating by those who fear the sometimes harsh realities of losing. Left unchecked, firms may engage in practices that undermine competition. When firms engage in such behavior, effective law enforcement is necessary to restore competition.
Law enforcement is a necessary tool, but it is not sufficient to ensure that markets function properly. Rather than breaking the rules, firms may instead seek the assistance of the government to shield them from competition. For example, a firm may ask for regulations that limit the number of market participants or impose substantial regulatory approval costs on new entrants. Such overly burdensome regulations may prove as disruptive as cartelization or other anticompetitive practices. Yet, because they are sanctioned by the government, they do not violate the law and mere legal enforcement is not an option for restoring competition. Accordingly, intervention in the form of competition advocacy may be the only means to ensure that markets continue to function properly.
A consumer protection regime – policy, law, and public and private advocacy – aims to prevent sellers from unfairly increasing sales by misrepresenting their products or by engaging in unfair practices such as unilateral breach of contract. Without a consumer protection regime, widespread and persistent deception by a group of sellers may lead consumers to doubt the integrity of an entire industry or distrust markets generally. Thus, by striving to keep sellers honest, consumer protection laws do more than safeguard the interests of the individual consumer. Namely, they serve the interests of consumers generally and facilitate competition.
Kenya lacks well conceived competition and consumer protection policies, laws, and practices. First, it is unclear whether the purpose of Kenya’s existing competition law is to protect the competitive process, protect individual competitors, or promote other social goals. Second, the competition law’s provisions are often confusing or inconsistent with international best practice, thereby creating legal uncertainty for businesses and making it difficult to enforce the law. Third, there is no competition advocacy mandate in the law to provide a check on, among other things, overly restrictive governmental regulations that may hinder the competitive process. Fourth, Kenya lacks an overarching consumer protection law, thus leaving its consumers unnecessarily exposed to false and misleading information. Consequently, Kenya’s competition and consumer protection laws and policies need serious review and revision.
In competition, the legal framework is relatively the strongest framework area, although improvements could certainly be made to the law. As the indicator chart above reveals that implementing institutions are the weakest framework area under competition.
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