Anti-Monopoly Law And Free Market Economy: Policy And Basic Issues

Abstract

The United Republic of Tanzania joined other developed and developing countries in dealing with monopoly problem by enacting the Fair Trade Practices Act of 1994. This was part of implementing the economic liberation policy of adopting a free market economy introduced in 1991 to replace State monopolies established after the Arusha Declaration of 1967.The gist of the legislation is to encourage competition in the economy by prohibiting restrictive or unfair trade practices controlling monopolies and concentrations of economic power. Although countries may have different political and economic policies as well as different policy considerations, it is generally agreed that anti-monopoly policy in most countries is aimed at promoting competition. Competition is considered to be the form of industrial organization, which is most likely to yield certain economic benefits. This is as far as policy issues are concerned. As far as basic issues on this subject are concerned, the controversies anti monopoly law have caused have arisen from differences of opinion on the desired degree of governmental interference in economic life. The emphasis of the causal link between Market structure of an industry which in turn influence the conduct of the market and thus indirectly determine some dimensions of the performance of the market has created a problem of approach in order to take action against concentration of economic power and unfair or restrictive trade practices. As a result of this, it has been suggested that the best policy for tackling this problem must take account of the following. First, that the structure of the business does not have unwarranted concentration of economic power. This is called the structural approach. Second is the performance approach that is directed against the specific conduct or practice of a firm or firms. This is intended to make sure that this conduct does not detrimental effect on the freedom of market action of other firms or do not adversely affect consumers. Finally the conduct approach examines the performance of the firm or firms to see if they have had effects on the performance of other firms or market in question. It is only when that is the case that government interference becomes necessary. It is not clear which of these approaches the government of Tanzania will adopt. At least the purpose of the Fair Trade Practices Act as stated in the preamble is "to encourage competition in the economy by prohibiting restrictive trade practices, regulating monopolies, concentration of economic power and prices, and to protect the consumer. This law protects consumers because they are the ultimate beneficiaries of promoting and maintaining fair trade practices. This by and large is the same purpose similar legislation are intended to achieve in other countries. Tanzania has therefore the opportunity to borrow a leaf from countries with long experience in tackling the monopoly problem.


African Journal of Finance and Management Vol.9(2) 2001: 1-7