The Competition Authority of Kenya (CAK) director-general Wang'ombe Kariuki. PHOTO | FILE
By NEVILLE OTUKI
The competition watchdog has launched an inquiry into
the conduct of powerful trade associations with cartel-like behaviours
to weed out practices that have denied consumers full benefits of a free
market.
The investigation targets banks, microfinance institutions,
forex bureaus, capital markets, agriculture and insurance lobbies, which
will have to disclose their dealings and those found culpable indicate
how they plan to rectify their anti-competitive behaviour.
The Competition Authority of Kenya (CAK) published a
gazette notice that gives legal teeth to a Special Compliance Programme
that seeks to align the practices of lobby groups in finance and
agriculture sectors with the competition law.
“Notwithstanding the coming into force of the
Competition Act, trade associations continue to have rules, practices
and procedures which are likely to contravene the Act,” the CAK
director-general Wang’ombe Kariuki said in the notice dated June 26.
The list of illegal practices includes recommending
pricing formulas and terms of sales such as discount, credit, transport
and delivery costs as well as sales and production volumes to influence
the market.
Others are use of rules agreed upon by members to
establish prices, restrict advertising or exclude competitors from the
market.
Entering into agreements which divide customers or geographic regions for coverage among members is also considered illegal.
The Kenya Bankers Association, the Association of
Kenya Reinsurers, the Association of Kenya Insurers and the Kenya Forex
Bureaus Association make the list of financial associations that will be
required to re-evaluate their operations.
These associations will have to submit board
reports and presentations made since 2011 to the competition watchdog,
circulars sent to members, contacts and names of members of the
associations since 2011.
The CAK is also demanding full disclosure of
directives issued to members by the associations on pricing of product
and services.
Those found in breach of competition laws but would
not have disclosed to the CAK in the three months to September will
face penalties, including imprisonment of their directors for five years
or payment of a Sh10 million fine.
The compliance exercise could offer much-needed
relief to Kenyan consumers who have for years been paying high prices
for financial services and agricultural produce because of rules set by
the cartel-like associations.
The CAK says the high costs are partly driven by anti-competitive business practices that give rise to cartels.
The competition law also allows the authority to impose a financial penalty equivalent to 10 per cent of a firm’s sales.
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