Physical Address
Kampala, Uganda
The Competition Act, which was first tabled before Parliament in December 2022, was passed for a second time in September 2023 and finally received presidential assent on February 2nd, 2024. The Act therefore establishes primary legislation governing competition matters in Uganda.
Earlier commentary on the Bill, which can be accessed here, provided insights on certain key aspects of the law, the potential loopholes within the law from a comparative standpoint with the Competition Act of Kenya, and made proposals for enhancement of the clauses then.
This commentary provides an update on the Act and highlights a few concerns that remain. It is imperative to note that some potentially contentious clauses were omitted, while others have remained in the Act as is highlighted herein. This commentary is restricted to the matters raised in earlier commentaries on this subject.
General Application and Exemptions
The Act provides for regulated conduct, which includes anti-competitive practices, anti-competitive agreements, abuse of dominant position, and the effects of mergers, acquisitions, and joint ventures on competition.
However, the Act does not go as far as providing for the persons, legal or natural, and public or private, to whom the law applies – unlike similar legislation in the region, and contrary to the recommendation of the Committee on Trade, Tourism, and Industry (the “Committee”) which was to the effect that the law should apply to all economic activities and apply to all persons including government, state corporations and local authorities if they engaged in trade. A clear provision on this aspect would have gone a long way in settling the question of the applicability of the law to government, state corporations, and local corporations because it is a matter of key concern considering recent developments in the petroleum sector.
It is worthy of noting, however, that the Act omitted the blanket exemptions previously granted to government-owned enterprises as well as the power of the responsible Minister to exempt entities from the application of the Act on grounds of national security and interest. Curiously, there is also no mention of the possibility of exemptions in the Act, which is also unlike similar legislation elsewhere.
It remains to be seen whether the regulations that will operationalize the Act will provide further clarity on these matters.
Administration
Additional commentary on the Bill, which can be found here, highlighted the importance of constituting an independent competition commission for purposes of administration of the Act. This is indeed in line with recommended practice and would go a long way in building institutional trust, independence, efficiency, objectivity, and impartiality in the administration of the law.
The Act has however maintained the mandate of administration and enforcement with the ministry responsible for trade assisted by a technical committee, in departure with the recommendations of the Committee and recommended practice.
The independence, efficiency, and effectiveness of the ministry and the technical committee will remain a matter of concern going forward.
Offences and Penalties
The Act largely maintained the provisions on offenses and penalties that may be imposed in the event of an investigation and finding of non-compliance with the Act. The penalties may include among others, a fine not exceeding 10% of the average turnover for the last 3 years of an entity or an order of compensation to an aggrieved party. The Act also maintains the possibility of personal liability for directors, secretaries, or officers of an entity in the event of non-compliance with the consent, connivance, or willful neglect on the part of directors, secretaries, or officers of that non-compliant entity.
Directors and officers of companies will thus be required to ensure ongoing compliance with the Act.
Conclusion
The Competition Act is an important step towards entrenching a competition law regime in Uganda. The effectiveness and efficiency in the enforcement of the law will remain a huge concern and will require steadfast political will and dedicated fidelity to realizing the objectives that the Act seeks to achieve.
Disclaimer: “The views and opinions expressed on the site are personal and do not represent the official position of Stanbic Uganda and Khulani Capital.”
