BUSINESS CARTELS AND RESTRICTIVE TRADE PRACTICES MONOPOLIES IN KENYA AS COMPARED TO THE POSITION IN THE UNITED KINGDOM AND THE UNITED STATES OF AMERICA

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Abstract

This study will be a comparative study on how well we can implement our Competition Laws in the promotion of restrictive trade practices in Kenya based on the successes (or failures) of the more economically developed states like the US and the UK.[1]

This study will be based on the laws that seek to regulate business cartels. It will be a comparative study between Kenya and two developed states i.e. United Kingdom and United States of America. This study’s major concern will be on steps Kenya can take in order to effectively implement the Competition Laws in Kenya by applying certain methods that were applied in the two states of the UK and the US that were successful in regulating trade practices within their jurisdiction and avoiding the development of illegal business cartels.

A business cartel is a formal organization where there is a small number of sellers and usually involves homogenous products may agree on such matters as price fixing, total industry output, market shares, allocation of customers, allocation of territories, bid rigging, establishment of common sales agencies, and the division of profits or combination of these. The aim of such collusion (also called the cartel agreement) is to increase individual members’ profits by reducing competition. Business Cartels are a form of business that is termed to be an example of oligopolies. An Oligopoly is a type of business entity whereby many small business enterprises come together to form one umbrella body in order to help them better run their businesses.

Business cartels are illegal in most countries including Kenya. However, there are a few which are legal e.g. the Organization of Petroleum Exporting Countries (OPEC), has often been accused of operating like a business cartel but it is actually protected by the Foreign Trade Relation Laws of the US.

In Kenya, oligopolies mostly exist in the oil and matatu sector. However, they mostly operate as cartels as we shall see in the statement of the problem below. The main difference between a monopoly and an oligopoly is as follows:

 

[1] Bauer, P, West African Trade: A Study Of Competition, Oligopoly And Monopoly In A Changing Economy (Volume 28 Of Routledge Library Editions: Development, Routledge, 2012)

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