Since January 2019, a number of new laws, rules, and guidelines relating to competition law have been enacted. These include:

a) The Competition Amendment Act, 2019 (“Competition Amendment Act”)

The Competition Amendment Act, which came into force on 31 December 2019, amends the Competition Act, 2010, to create a more robust framework for the regulation, monitoring, assessment, and review of abuse of buyer power. The key change introduced by the Competition Amendment Act is a provision empowering the Competition Authority of Kenya (“CAK”) to investigate and take action against conduct amounting to an abuse of buyer power. Provisions relating to buyer power were initially introduced into the Kenyan competition regime in 2017 by the Competition Amendment Act, 2016 (“2016 Amendment Act”). However, the 2016 Amendment Act did not specifically grant the CAK powers to monitor and investigate abuses of buyer power. Pursuant to the Competition Amendment Act, the CAK is now empowered to investigate abuses of buyer power and to conduct market inquiries into any matter relating to abuse of buyer power. The CAK is further empowered to monitor sectors that are experiencing or likely to experience incidences of abuse of buyer power.

b) The Competition General Rules, 2019 (“Competition General Rules”)

The Competition General Rules, which came into force on 6 December 2019, have introduced changes to the merger notification thresholds, requirements, and filing fees. They further clarified certain procedural aspects of Kenya’s competition law regime relating to merger control, restrictive trade practices (i.e., block exemptions) and consumer welfare. The key changes introduced by the Competition General Rules are summarised below:

i. Value of assets (not just turnover) to be considered

The test on whether and what form of merger notification is required for a transaction is now based on the higher of the combined turnover or value of assets of the merging parties in Kenya. This is a departure from the previous requirements where the value of assets was only considered where the merging parties did not have any turnover in Kenya. This change may lead to merger filings being required for transactions that would otherwise not have been caught based on turnover alone.

ii. Block exemption of mergers

The following transactions will not require notification to the CAK:

• Transactions which are wholly outside Kenya with no local nexus. However, it remains unclear whether the local nexus requires the parties to have subsidiaries or branches in Kenya or whether merely deriving turnover and/or having assets in Kenya with no physical presence will suffice.
• Where the higher of the combined turnover or value of assets of the merging parties in Kenya is KES 500 million (approx. USD 5 million) or less. The block exemption for small transactions is long overdue and will provide significant respite for small investments in Kenya.
• Where a COMESA merger filing has been made and at least two-thirds of the higher of the turnover or value of assets is not derived from Kenya. Parties are now required to only inform the CAK within 14 days of submitting a COMESA merger filing. This is a welcomed change, as it removes the previous mandatory requirement for dual-notification of the same transaction to the CAK and COMESA and promotes the COMESA Competition Commission’s objective of being a one-stop-shop for regional competition matters.

iii. Revised merger thresholds and filing fees

The Competition General Rules provide revised merger notification thresholds and merger filing fees, which are set out in the table below.

iv. Extension of merger notification forms

The merger notification forms have been amended, with merging parties now required to provide additional information including:

• details of previous merger filings made by the merging parties and their affiliates;
• other entities where directors of the merging parties hold the positions of directors and/or shareholders; and
• nationalities of the directors of the merging parties.

c) The Revised Guidelines on Relevant Market Definition (“Revised Market Definition Guidelines”)

In July 2019, the CAK published the Revised Guidelines on Relevant Market Definition to update the previous Guidelines on Relevant Market Definition, which have been in place for several years (“Previous Market Definition Guidelines”). The Revised Market Definition Guidelines seek to provide clarity on the approach the CAK takes when defining markets in Kenya and when determining what constitutes market power. The definition of a relevant market under the Revised Market Definition Guidelines is similar to the definition under the Previous Market Definition Guidelines, save for the addition of the production methodologies involved, raw materials used, and route-to-market considerations to the product market definition.

d) The Fining and Settlement Guidelines, 2020 (“Fining and Settlement Guidelines”)

The Fining and Settlement Guidelines set out the principles for the determination of administrative penalties and the procedure for pursuing settlements as provided for under the Competition Act in relation to:

• contraventions relating to restrictive agreements, decisions and practices by undertakings or associations of undertakings, abuse of dominance, and abuse of buyer power; and
• mergers implemented without prior authorisation by the CAK.

The Fining and Settlement Guidelines provide that the CAK will work from a starting point, known as a base amount, which may be adjusted based on aggravating and mitigating factors. The proportion of adjustment of the base amount under the Fining and Settlement Guidelines will be based on factors such as:

• the nature, duration, gravity, and extent of the contravention;
• any loss or damage suffered as a result of the contravention; and
• the market circumstances in which the contravention took place.

The following guidelines, which were proposed by the CAK in January 2018, have not yet been finalised and published:

The Competition (Abuse of Buyer Power) Rules;

1. Revised Consolidated Guidelines on the Substantive Assessment of Mergers under the Competition Act;
2. Search and Seizure Guidelines; and
3. Consumer Protection Guidelines.

On 21 February 2020, the CAK notified the public that it would carry a sector study into the regulated and unregulated digital credit markets in Kenya, under financial and technical support from organisations known as Innovation for Poverty Action and Financial Sector Deepening Kenya. The CAK indicated that the main objective of the study is to identify and address potential consumer protection concerns in the regulated and unregulated digital credit markets.

The CAK finalised its study and issued a report in May 2021. Some of the findings of the CAK include: (i) there were increased levels of concentration of loans linked to mobile money providers; and (ii) there were multiple borrowing in an environment with high information asymmetry on positive repayment between banks and non-banks, which raises potential risks for competition and consumer choice in the long run. The CAK, therefore, recommended the development of policies that will contribute to a more competitive digital credit ecosystem.

The report on the digital credit market inquiry and previous market inquiries and sector studies conducted by the CAK in previous years are accessible under the “Planning, Policy and Research” tab on the CAK’s website.

The CAK has not publicly expressed concern in relation to any industry or sector. However, on 13 March 2020, after the first case of COVID-19 was reported in Kenya, the CAK issued a cautionary notice to the public on the intention of some manufacturers and retailers to collude to increase prices and/or hoard various consumer goods.

In addition, the CAK initiated investigations on bread suppliers in 2019. The CAK was investigating compliance with product standards, such as labelling requirements, set by the national standards body (Kenya Bureau of Standards). Most of the retailers that were subject of the CAK’s investigation were asked to amend their bread labels and the matters were closed.

Further, the CAK initiated investigations in April 2020, in relation to delays by some retailers in paying their suppliers. The CAK initiated the prompt payments investigation on the grounds of the buyer power provisions of the Competition Act.

Overall, the CAK appears to be paying a lot of attention to the activities of retailers in the country.

The sectors, which the CAK has focused on in the past few years for purposes of competition law enforcement, are mostly informed by complaints made in relation to the sectors. For instance, following the enactment of the Competition (Amendment) Act, 2019 which, among others, empowered the CAK to monitor the activities of sectors and undertakings where there is ongoing or likelihood of abuse of buyer power, there have been a number of abuse of buyer power complaints lodged with the CAK relating to players in the insurance and retail sector. This led to the CAK conducting investigations into the two sectors and eventually resulted in the development of model contracts for use by buyers and suppliers in the retail and insurance sectors. Similarly, concerns around the steel industry have resulted in investigations into the sector for alleged restricted trade practices and collusion. Further, the CAK developed the Retail Trade Code of Practice, 2021, in consultation with the stakeholders in the retail sector to address the abuse of buyer power issues arising from the sector.

The risk of dawn raids by the CAK in Kenya is moderate. As far as local counsel are aware, there have only been three dawn raids undertaken – (i) back in 2015, in the fertiliser sector, where at least two companies were raided; (ii) in 2018, several paint manufacturing and distribution companies in Kenya were raided; and (iii) more recently in 2021, there was a dawn raid in the steel industry. Local counsel are not aware of any dawn raids that have been conducted by the CAK in 2022.

Additionally, the CAK has been successful in gathering evidence, using more conventional methods of investigation. In Kenya, dawn raids are normally used as a last resort as they are quite disruptive and are subject to the CAK obtaining search warrants in some cases.

We expect that the CAK may undertake more dawn raids in future, once the Search and Seizure Guidelines proposed by the CAK are promulgated into law

The CAK has not introduced any specific competition enforcement regulations in response to the COVID-19 pandemic. However, the CAK has implemented measures to ensure ease of correspondence and filing of documents with the CAK during this period. The CAK issued a notice that all applications should be made through its E-Filing Portal, which is accessible on its website.

The mentioned measures are still in place and accurate. There have been no further regulations or measures related to the COVID-19 pandemic.

On 16 March 2020, the CAK penalised a retailer for raising the price of its hand sanitisers from the usual selling price of KES 800 (approx. USD 8.00) to KES 1,000 (approx. USD 10.00). The CAK treated this matter as one of unconscionable conduct that is contrary to the provisions of section 56 of the Competition Act. The CAK ordered the retailer to contact and refund all the customers who purchased 960 pieces of the hand sanitisers above the usual selling price, and submit evidence confirming that the funds had been returned by 26 March 2020.

The CAK also issued cease and desist orders in March 2020 to various manufacturers and distributors who had entered into exclusive agreements relating to brand exclusivity, allocation of territories, and allocation of quantities supplied.

Agreements by firms to cap prices of products or services would be deemed to be a restrictive trade practice, contrary to section 22 (1) (b) of the Competition Act. The CAK has been proactive in investigating alleged cases of restrictive trade practices and penalising any entity found guilty of engaging in a restrictive trade practice. Recently, in 2021, the CAK warned professional bodies against colluding to set prices. This followed attempts by engineers and accountants to set minimum client fees. 

Although the CAK has stated that it acknowledges the unique competition issues that could arise in relation to digital markets and that digital markets remain on its radar, there are no separate competition regulations or measures developed for digital markets in Kenya. The only reference relating to digital markets is in the Revised Guidelines on Relevant Market Definition, which acknowledge that the traditional aspects of market definition that make reference to a product market and a geographic market may not be sufficient when dealing with complex markets like digital or multi-sided platforms. In dealing with digital markets, the Market Definition Guidelines require the CAK to consider:

• substitutability of the products being offered by these virtual market and identify if there exists a constraint from competing virtual and/or physical markets; and
• substitutability, at one side of the market, in contact with the wider market for the basic products.

Local counsel are not aware of any industries, markets or sectors that the CAK considers to be concentrated.