The Competition Act aims to endorse, support and maintain a healthy competition in the market. Its objective is to forbid anticompetitive agreements between firms. It also makes it illegal for businesses establishments to neglect and abuse a dominant market position. Offenders can be fined and even be disqualified from being a director and, in some cases, sent to prison.
Under competition law, mergers between businesses can also be restricted if they have a chance to reduce competition and non-competitive markets can be investigated through proper market studies.
The Competition Act of1998 has prohibited anti-competitive agreements between businesses It is therefore not encouraged to
i) agree to fixed prices or terms of trade
ii) bound production to reduce competition
iii) cut up markets or suppliers
The Act generally is applicable to agreements between businesses with a considerable combined market share. However, the small businesses need to keep away from getting involved in anti-competitive agreements, such as associations.
This Act also bars exploitation of a dominant market position. This is applicable to businesses that have a large market share, generally 40 per cent or even more.
