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The Ministry has been granted powers to review and, if necessary, block deals that could harm competition. While this is aimed at preventing monopolies and protecting smaller enterprises
Uganda’s recent enactment of the Competition Act, 2024 (Act 5 of 2023) (Competition Act) marks a significant shift in its regulatory landscape.
The law, introduced to promote fair competition, prevent monopolistic practices, and protect consumers, represents a step toward aligning Uganda with regional and international best practices in market regulation.
However, this development raises important questions about how the Competition Act will impact doing business in the country, particularly for foreign investors and large corporations. The introduction of the Competition Act has several implications for both local and foreign businesses operating in Uganda. These include:
Businesses in Uganda are now subject to increased scrutiny, especially when it comes to mergers, joint ventures, and acquisitions. The Ministry has been granted powers to review and, if necessary, block deals that could harm competition. While this is aimed at preventing monopolies and protecting smaller enterprises, it also means that businesses must navigate a more complex regulatory approval process when considering expansions, mergers, or acquisitions.
This could potentially result in delays in the deal-making process, as regulatory approvals may take longer due to the detailed investigations required under the new law. For foreign investors looking to enter the Ugandan market through mergers or joint ventures, this may pose an additional hurdle.
One of the major objectives of the Competition Act is to protect smaller businesses from being unfairly dominated by larger corporations. This could create a more favourable environment for SMEs, which have traditionally faced challenges competing against larger, often multinational, firms. However, larger corporations may be under increased scrutiny, particularly in industries where they hold significant market power or businesses, particularly those offering essential goods and services, this could mean increased pressure to maintain competitive pricing and enhance their offerings. Companies that rely on high margins driven by market dominance may need to re-evaluate their strategies to align with the new regulatory environment.
The Competition Act could pose challenges for multinational corporations that are accustomed to operating with substantial market power. Uganda’s new law specifically targets practices such as abuse of dominance, which is often a concern with large international firms operating in smaller economies. Companies with significant market share may need to re-assess their pricing, distribution, or marketing strategies to ensure compliance.
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While the Competition Act brings Uganda in line with regional and global competition standards, its immediate impact on foreign investment is likely to be mixed. On one hand, by promoting a more transparent and fair market, Uganda could become a more attractive destination for investors who value regulatory stability and fairness. On the other hand, the increased scrutiny and regulatory requirements might deter investors if the law is inappropriately applied.
