This agency.Ethiopian trade competition and consumer protection law

This paper designed to give the participants /readers a nutshell about Competition law of the Federal Democratic Republic of Ethiopia.Competition Policy is an instrument to achieve efficient allocation of resources, technical progress, consumerwelfare and to regulate concentration of economic power detrimental to competition.For competition policy to be existed two requirements must to be fulfilled, according to Mandalla. First, there is a need for an effective antitrust law to deal with the anticompetitive behavior of firms and secondly, there is a need to examine and evaluate government policies that impact on competition. Antitrust law, the regulation of monopolies, consumer protection and regulation of domestic policy and regulation are generally considered to be an integral parts of competition policy.Competition law and policies, since the emergence of the concept, have been used in different countries in different eras through public and private enforcement. Competition laws are regulated primarily to promote and maintain fair competition.Competition law is essentially to address private and public restrictions on competition. The model law on competition put forward by the United Nations conference on Trade and Development (UNCTAD) outlines the aim of competition law as:To control or eliminate restrictive agreements or arrangements among enterprises, or merger and acquisitions or abuse of dominant positions of market power, which limit access to markets or otherwise unduly restrain competition, adversely affecting domestic or international trade or economic development. In Ethiopia, there hasn’t been any unified and independent consumer protection law until 2010, except the repealed Trade Practices Proclamation N0 329/2003, which had a limited protection for consumers.In August, 2010, the Federal parliament enacted Proclamation N0 685/2010 in which wholly repealed the previous Proclamation N0 329/2003.The proclamation is a new development in granting consumers’ rights up to establishing an autonomous government agency.Ethiopian trade competition and consumer protection law In Ethiopia, for long, there has been no unified consumer protection law. The protections accorded to consumers have been based on various private laws such as the law of contract and extra contractual liability law, and public laws including the criminal law and regulatory laws of different nature. Ethiopia has gone through different economic systems, state controlled market economy, mixed economy and free market economy that started since 1991.Following the takeover of power by pro socialism regime in 1974, almost all economic establishments were nationalized. All modern economic establishment including land, banks and insurance companies, manufacturing, transport, trade enterprises, commercial farms, urban rented houses, etc., were nationalized.After the downfall of the Dergue regime in 1991, By EPRDF, the political and economic structure of the country has changed ever since. Among the policy reforms that has made by the new government were, economic development strategy, industrialization Strategy, Financial policy, Trade policy, Privatization, Monetary and Exchange rate policies, investment policy and restructuring and competition.In 2003 the country proclaimed the first competition law in history, which was named as Trade Practice Proclamation. After the proclamation was in effect, critics arise as it mixed up competition and regulation and failed to fairly address basic principles in competition law. It was, therefore, not normally defined as competition proclamation as it involved issues outside competition such trade policy, unfair competition, anti-dumping, and price regulation. Its major objectives include: securing a fair competitive environment through the prevention and elimination of anticompetitive environment through prevention and elimination of anticompetitive and unfair trade practice; and safeguarding the interest of consumers through the preventions and elimination of restraints on the efficiency supply and distribution of goods and services.In 2014 the new proclamation, by repealing the old, was effected named as Trade competition and ConsumersProtection Proclamation . The proclamation applies to all commercial activities except such “activities that are, according to investment proclamation, exclusively reserved for the Government.” Besides, ” enterprises having significant impact on development and designed by the Government to fasten growth and facilitating development” are also excluded and so are “basic goods or services that are subject to price regulation.” The new proclamation is better in addressing competition issues. This article summarizes the main competition matters addressed by the new proclamation.I.e. abuse of market dominance, regulation of restrictive agreements and regulation of mergers. Abuse of market dominance One of the anticompetitive acts prohibited under Ethiopian competition law, as stipulated in Part II Article 5, is abuse of market dominance. the Proclamation, defined abuse of market dominance as an act in which a person either by himself or acting together with others in a relevant market, is deemed to have a dominant market position if he has the actual capacity to control prices or other conditions of commercial negotiations or eliminate or utterly restrain competition in the relevant market.The general message of the definition is that the anticompetitive business practice of enterprise or businessperson having dominant position is prohibited for the reason it can eliminate or affect competition. The Proclamation under Article 5 lists acts of abuse of market dominance, which are harmful to competition, which constitutes the following: 1) Limiting production, hoarding or diverting or preventing or withholding goods from being sold in regular channels of trade; ?2) With the view to restrain or eliminate competition, doing directly or indirectly such harmful acts, aimed at a competitor, as selling at a price below cost of production, causing the escalation of the costs of a competitor, preempt inputs or distribution channels; ?3) Directly or indirectly imposing unfair selling price or unfair purchase price; ?4) Contrary to the clearly prevalent trade practice refusal to deal with others on terms the dominant business person customarily or possibly could employ as though the terms are ?not economically feasible to him; ?5) Without justifiable economic reasons, denying access by a competitor or a potential ?competitor to an essential facility controlled by the dominant business person; ?It is stated in the proclamation, under article 6, that the Council of Ministers may determine by regulation, the numerical expression of the degree of market dominance. Abuse of market dominance is anti-competitive and may significantly harm the economic activities of a country. Despite the existence of this fact, abuse of market dominance may bring about efficiency. This is a situation where a firm becomes dominant by its best performance of offering high quality product at lower price than its competitors. The proclamation provides for the circumstance by which Council of Ministers may exempt some trade activities from the application of the provisions of abuse of market dominance where the activities are deemed vital in facilitating economic development.Regulation of restrictive business agreements . A restrictive business agreement is defined as an agreement among business entities not to compete with each other. The agreement is designed to limit or eliminate competition between enterprises with objective of increasing price and profits. The proclamation does not specifically address the issue of restrictive business agreement. A restrictive business agreement for the purpose of the proclamation includes agreements, concert practice or decisions of associations of businesspersons.The term agreement, in the Proclamation, includes mutual understanding, written or oral contract and operational procedures whether or not legally enforceable. The Proclamation defined concerted business practice as a unified or cooperative conduct of businesspersons depicted in a way that does not look like an agreement and done to substitute individual activity..  The Proclamation prohibits both horizontal and vertical restrictive business practice. For the purpose of the proclamation, Horizontal agreements or relationship is deemed to exist between competing businesspersons in a certain market, whereas vertical relationship is deemed to exist between businesspersons and their customers or suppliers or both. According to the proclamation, the person accused of anticompetitive restrictive business agreements may defend itself by proving that the technological or efficiency or other pro-competitive gains of the agreement outweigh the detriment of the prohibited acts. REGULATION OF MERGER AND UNFAIR COMPETITION Merger is when two business entities joined together for a common business agenda so as to expand the business and gain more profits. According to the proclamation article 9, merger is regarded to have occurred when two or more business organizations previously having independent existence amalgamate, or when such business organizations pool the whole or part of their resource together to carry on certain business. Merger may also occur by directly or indirectly acquiring shares or securities or assets of a business organization by a person or group of persons jointly or the business of another person through purchase or any other means. Similar to abuse of market dominance and restrictive business agreements, the proclamation enunciates that all merger cases are nor prohibited. Merger is prohibited where Trade Competition and Consumers Protection Authority decided that it causes or is likely to cause a significant restriction against competition or eliminates competition.Notification of Merger shall be made any person who proposes to enter in to an agreement or arrangement of merger shall give notice to the Authority by disclosing the details of the proposed merger.Pursuant to Art. 9(2) of the proclamation, No Merger arrangement shall be implemented before the authority grants permission. The authority may examine additional documents in order to reach the decision of granting or denying Merger application. The authority shall have the power to examine and decide on merger cases. Once it decided that merger is anticompetitive, it shall notify the body that conducts commercial registration.The Proclamation provided that any act or practice carried out in the course of trade, which is dishonest, misleading, or deceptive and harms or is likely to harm the business interest of a competitor shall be deemed to be an act of unfair competition.  Consumer protection  In many jurisdictions consumer protection is seen as a separate legislation from competition proclamations. The Ethiopian trade and consumer protection proclamation has a separate chapter dealing with consumer protection.Consumers rights enshrined under Article 14 of the proclamation are, the right to get sufficient and accurate information or explanation on the quality and type of goods and services he/she purchases; selectively buy goods or services; not to be obliged to buy for the reasons that he/she looked into quality or options of goods and services or he/she made price bargain; be received humbly and respectfully by any business person and to be protected from such acts of the business person as insult, threat, frustration and defamation; claim compensation or related rights thereof either jointly or severally from persons who have participated in the supply of goods or services as manufacturer, importer, wholesaler, retailer or in any other way for damages he has suffered because of purchase or use of goods or services. Institutional frameworks controlling competition in Ethiopia The institutional framework refers to matters related to the composition of the authority, their appointment, tenure, powers and duties etc.Art.28 of Ethiopian Trade Competition and ConsumersProtection Proclamation), deal with the organization of the authority. The provision does not give, as such; detail of the organization of the authority as it simply states few points. Accordingly the proclamation under article 28 stipulates that the authority shall have, a director General to be appointed by the Prime Minister upon the recommendation of Ministry of trade; and the necessary judges and staff. The proclamations fails to address and a give detail description of the qualification of the persons to be appointed as director general, judges and other staffs and also fails to address the tenure of time set for which the Director General remain in office.The recommendation on UNCTAD model law on competition and many countries legislation set the tenure of time for the Director General/chairman/, judges and other staff of the Authority with the possibility of reappointment or without reappointment. Under article 31, The Director General is the chief executive of the Authority and shall organize, direct and administer the activities of the Authority. Each division of the adjudicative tribunal of the Authority shall have one presiding and two other judges to be appointed by the Prime Minister

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