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Ethiopia’s Competition Law: Crippled by Habitual Repeals and a Victim of Incongruous Government Policy and Institutional Failures

Competition law intends to facilitate a healthy competition between private businesses as a result of which consumers benefit from reduction of price or improvement in quality of goods and services. Ethiopia enacted three of such laws in just about a decade. Each of them repealed its predecessor (Proc. No. 813/2013 repealed the three years old Proc. No. 685/2010, and the latter repealed the seven years old Proc. No. 329/2003). The now in force law, which is Trade Competition and Consumer Protection Proc. No. 813/2013, was passed in 2013. I wrote this short analysis on August 27, 2014 (which was posted on Facebook Ethiopian Lawyers Group Page) with a view to question to question the practical significance of the amendment in the absence of a free market policy. I am sharing it on this blog because I still believe the issue still remains a valid subject matter for discussion.

I believe that the practical significance of the proclamation is highly limited due to the following two reasons:

I. The major problem with our competition law was not in relation to its contents but relates to the government’s failure to enforce them.Why change the laws fast enough to not let us understand the change and the cause of the change itself? Others may say they were repealed before they even had come to know what they were. I have an understanding that the building blocks of (real) competition law were pretty much universally known by the time the first proclamation was enacted in 2003. The three major issues that are addressed by competition law are: cartels or concerted practices, abuse of monopoly or market dominance and anticompetitive mergers and takeovers. These major issues were already substantially covered by Proc. No. 329/2003 & 685/2010. What the government needs to do is simply put them into practice before making unnecessary and swift amendment of untested laws. If the real reason was protecting business and helping consumers benefit from reduction in price and increase the quality of goods and services consumers get, it could have been done by the then existing laws. Therefore, a mere change of the laws adds little or nothing and does not yield a practical significance.

II. If competition law failed to achieve its goals, it would be because Ethiopia’s Policy and Institutional practice does not only fail to promote competition but also stands at odds with the foundational assumptions of competition law.Why does Ethiopia even need to have a Competition Law? One may actually be thrilled by Ethiopia having one. Competition law has a tricky but a foundational assumption that it is built upon. If you’re enacting a competition law, you’re assuming that most of your market is unregulated; and that businesses can freely enter and compete in the market; and that (as a result of which) you want to interfere in the market with a view to correct market failures that would arise from ant-competitive behaviors in the market. Ethiopia cannot turn blind eyes to this foundational assumption. I think this is the elephant in the room. Is Ethiopia’s market substantially unregulated? If yes (which many persons may disagree with), it may be fine to have the law? If not, the law would be a weapon of mass destruction that would create economic disparity in a nation that is assumed to have a strong sentiment towards group rights (resembles ‘capture theory’ ha). Just to mention, government itself may be a major cause of anti-competitive behaviors, e.g., by denying market entry and access to means of production which the government owns. Reconciling Ethiopia’s developmental statism and government policies that are capable of hindering competition with the objectives of Competition law would be a Herculean task. Am afraid that would be likely to shadow the real objectives of the law itself.

Therefore, Ethiopia needs to set up a proper institutional and policy framework that upholds competition law enforcement instead of habitually repealing and replacing competition laws. My recommendation is that stop changing the laws and start to enforce the existing one by also abstaining from adopting policies that cripple the existing laws.

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