The Bill introducing Price Controls on some essential goods --moved by the Mathira MP Ephraim Maina -- without taking cognizance of the entire price chain that affects the final goods of products is totally misguided and harmful to producers of final products in Kenyan.

The cost of inputs and production are essential for determining the prices of goods

While we all appreciate the mischief the Bill intends to fix -- the pricing of essential goods and concern with the livelihoods of most Kenyans, the proposed solution of price fixing only focuses on one end of the spectrum, namely consumer prices and not the producer prices.

Any attempt to use prices to protect consumers must also consider the entire chain of production.

The business community  particularly manufacturing is opposed to the Price Control (Essential Goods) Bill 2009 which is currently in committee stage in Parliament.

Kenya has in place laws on Consumer protection and competition that could be used to address the problem of high prices instead of putting into place a new law that could conflict with the ones already in existence.

Instead of fixing prices of products, the MP should work with the Minister of Finance towards streamlining regulatory services including the Monopolies and Prices Commission or the proposed Competition Authority to achieve the vision and intention of the legislation he proposes.

While the law is expected to protect Kenyans against exploitation by unscrupulous businessmen and manufacturers, the proposed law, if passed, will in actual fact harm the consumers as some businesses may not be able to produce products at the fixed prices leading to shortages and growth of a secondary illegal market in price controlled goods.

The prices of final products is determined by other costs in the production chain, starting with costs of inputs and raw materials labour and services.

At the moment, the cost of doing business in Kenya is extremely high-- a factor that impacts negatively on the prices of products.

Compared to other countries, Kenyan businesses are faced with high energy costs, high taxation, stiff and costly regulation, and poor road network among other factors that contribute to the high cost of doing business.

All these eventually impact on the cost of products.

The government should therefore first work towards reducing the cost of doing business.

With further integration of the East African economies through the formation of a full fledged Customs Union in January 2010 and a Common Market later in July, Kenya could lose out if legislation continues to stifle business and some investors become more persuaded about relocation to other countries and markets that offer a more competitive businesses environment.

Introduction of price control measures, with the intention of benefiting consumers will only be short term, because in the long run, most manufacturers and producers will switch to other products where they can realise commercial returns.

A shortage of goods in the market will eventually result in the sky rocketing of the commodity prices.

Parliament must also be consistent in its legislation.

It has recently passed the Competition Law which has the mission of protection of consumers.

The purpose of the legislation is to promote and safeguard competition in the national economy; protect consumers from unfair and misleading market conduct; to provide for the establishment, functions and power of the Competition Authority and the Competition Tribunal, and for connected purposes.

The Competition law has already declared what will be considered Restrictive Trade Practices namely that agreements between undertakings, decisions by associations of undertakings, decisions by undertakings or concerted practices by undertakings which have as their object or effect the prevention, distortion or lessening of competition in trade in any goods or services in Kenya or a part of Kenya.

The law in the same section also lists the actions that might be construed as restrictive trade practices namely; Direct or indirect price fixing; market division or allocation of customers, area, goods or services; collusive tendering; minimum resale price maintenance; limits or control of production, outlets or access, investment or development.

Others are application of dissimilar treatment to equivalent transactions thereby placing some parties at disadvantage; placement of conditions that conclusion of contracts subject to acceptance by other parties of supplementary conditions which have no connection to subject of contracts at hand; Usage of intellectual property rights in manner hat goes beyond limits of legal protection and other actions or practices that otherwise prevents, distorts or restricts competition.

Parliament has already enacted the legislation to promote competition and ensure maximisation of consumer welfare through the establishment of both a tribunal and the Competition Authority as the regulatory institution for economic competition.

Such would succeed the challenged Monopolies and Prices Commission that operated under the Ministry of Finance.

MPs keen on consumer protection should ensure that the Minister for Finance expeditiously sets up the independent Competition Authority and resources it adequately to ensure that consumers interests are not infringed by producers and suppliers.

The writer is the chief executive of the Kenya Association of Manufacturers.