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Delivering for Consumers- Why Competition Policy is Important?

Kigali, 20 March 2014-The permanent Secretary in the Ministry of Trade and Industry, Emmanuel Hategeka has officially opened a two-day Technical Training Workshop on competition policy assessment with the World Bank Team. In his opening remarks, he said that, the purpose of the workshop was to increase awareness and technical knowledge about the scope and implementation of the Rwandan Competition Law 2012.

From Left to Right, Mrs Tania Begazo competition specialist World Bank, Mr Emmanuel Hategeka the permanent secretary of MINICOM and Mr Ignace Rusenga Mihigo World Bank Representative.

 

“I know that there are a range of participants here from government, the private sector and civil society. The workshop will present experiences of competition enforcement in the region and international best practices as well as cover some key concepts of competition law and economics”, said Emmanuel Hategeka.

On his part, the World Bank Team leader, Ignace Rusenga, emphasized the impact of the reforms which Rwanda has been implementing over a couple of years and reiterated that, business environment in Rwanda has greatly improved and this is manifested capital inflow from Foreign Direct Investment. He also, pointed out that, that, main beneficiary of competitive business environment is a consumer.

The Workshop is attended by different sectors, Insurance, Banks, Government Institutions, and Manufacturing Industries…etc.

What is competition policy?

Competition puts businesses under constant pressure to offer the best possible range of goods at the best possible prices, because if they don’t, consumers have the choice to buy elsewhere. In a free market, business should be a competitive game with consumers as the beneficiaries.

Sometimes companies try to limit competition. To preserve well-functioning product markets, authorities like the Commission must prevent or correct anti-competitive behavior. To achieve this, the National Inspectorate and Competition Authority (NICA) will monitor the following aspects:

Agreements between companies that restrict competition – cartels or other unfair arrangements in which companies agree to avoid competing with each other and try to set their own rules.

Abuse of a dominant position – where a major player tries to squeeze competitors out of the market

Mergers (and other formal agreements whereby companies join forces permanently or temporarily) – legitimate provided they expand markets and benefit consumers

Efforts to open markets up to competition (liberalization) – in areas such as transport, energy, postal services and telecommunications. Many of these sectors used to be controlled by state-run monopolies and it is essential to ensure that liberalization is done in a way that does not give an unfair advantage to these old monopolies.

Why is competition policy important for consumers?

Competition policy is about applying rules to make sure businesses and companies compete fairly with each other. This encourages enterprise and efficiency, creates a wider choice for consumers and helps reduce prices and improve quality.

Low prices for all: the simplest way for a company to gain a high market share is to offer a better price. In a competitive market, prices are pushed down. Not only is this good for consumers - when more people can afford to buy products, it encourages businesses to produce and boosts the economy in general.

Better quality: Competition also encourages businesses to improve the quality of goods and services they sell – to attract more customers and expand market share. Quality can mean various things: products that last longer or work better, better after-sales or technical support or friendlier and better service.

More choice: In a competitive market, businesses will try to make their products different from the rest. This results in greater choice – so consumers can select the product that offers the right balance between price and quality.

Effective market competition and well-functioning domestic markets encourage investment and improve private sector competitiveness by contributing to cost reduction, innovation and productivity growth; key ingredients for sustainable economic growth.

Consistent with its commitment to promote competitive markets, in 2010 the Government of Rwanda adopted the Competition and Consumer Protection Policy. The policy outlines the Government’s commitment to providing consumers with competitive prices and product choices, supporting SMEs and producers as well as improving the competitiveness of Rwandan businesses and creating a welcoming environment for foreign investment.

After the development and adoption of the policy, the Law Relating to Competition and Consumer Protection was enacted in 2012 and last year, the law establishing the National Inspectorate and Competition Authority (NICA) was also put in place.

Mr. Emmanuel Hategeka also informed the Meeting that efforts are ongoing to increase the effectiveness of this competition framework as a tool to support private sector development and economic growth.

He reiterated that the government is working to strengthen capacity on competition enforcement, and identify regulatory constraints that hinder the development of well-functioning markets.

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