Red alert: Competition Authority now warns professionals against fixing prices

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BD >>> The competition watchdog has warned professional bodies against colluding to set prices following attempts by engineers and accountants to prescribe client fees.

The Treasury is reviewing regulations that will set the minimum fees charged by accountants to curb price under-cutting and boost professionalism.

Engineers have also published a notice proposing new rules to set minimum charges and prevent undercutting in the professional body.

Competition Authority of Kenya said the moves are akin to fixing prices and will kill competition and make services expensive.

“It is important to note that “the envisaged arrangements of setting minimum rates/fees, highlighted in the media recently, are only meant to extinguish competition among members of the professional associations to the detriment of clients/consumers,” said Wang’ombe Kariuki, CAK director-general.

“Further, Article 227 of the Constitution of Kenya, 2010 provides that the government should procure goods and services through a system which is, among others, cost-effective.

“Floor pricing defeats this constitutional requirement,” he said.

Kenya’s antitrust body has previously shot down the proposed minimum fees for accountants, saying it would limit competition — raising questions on the Treasury’s renewed dalliance with the accountants over the matter.

The accountants had in 2015 requested to be exempted from competition rules — a move that would allow it to set minimum professional fees for accounting services.

The CAK rejected the request in a November 2016 decision, arguing that the benefits of minimum fees were outweighed by the potential harm they would cause in the marketplace.

There is concern that professional bodies set up by the government to regulate the conduct of members in certain professions like lawyers, accountants, engineers, and medical practitioners are killing competition by raising prices.

An Organisation for Economic Co-operation and Development (OECD) study noted there are concerns that professional regulation has the direct or indirect effect of restricting competition in the market for professional services, raising the price, and limiting variety and innovation in professional services.

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