Penalties imposed by the CAK are not publicly disclosed in all cases. However, based on publicly available information, the highest penalty local counsel are aware of in respect of prohibited practices was a fine of KES 20.799 million (approx. USD 191,630). The fine was imposed on Basco Paints for engaging in alleged collusive conduct with other manufacturers and distributors of paint products. In 2020, the CAK imposed penalties ranging from KES 47,711 (approx. USD 440) to KES 776,025 (approx. USD 7,150) on juice companies for misrepresenting the quality of their products on their packaging.

Other than investigations relating to abuse of buyer power highlighted below, local counsel are not aware of any investigations instituted by the CAK in relation to parties in a vertical relationship since January 2019. However, from the penalty highlighted under question 14 above, imposed on Basco Paints, it appears that the CAK may have instituted such investigations privately.  

Exclusivity and non-compete clauses are treated as restrictive trade practices in Kenya. This is pursuant to the provisions of section 21 of the Kenya Competition Act, which covers:

(a) agreements between undertakings;

(b) decisions by associations of undertakings;

(c) decisions by undertakings; or

(d) concerted practices by undertakings,

that have as their object or effect the prevention, distortion, or lessening of competition in trade of any goods or services in Kenya, or a part of Kenya.

The CAK has issued directions to some companies to remove exclusivity provisions in their contracts following filing of complaints to the CAK. The CAK also issued an order to major manufacturers and distributors of essential foodstuff such as maize flour, wheat, edible oils, rice, toilet paper, sanitiser and facemasks, to expunge any exclusivity arrangements entered into without the CAK’s approval, in a bid to alleviate the impact of COVID-19.

Yes. The CAK has launched investigations in relation to abuse of market power by retailers and has imposed fines in relation to this conduct. The CAK has also conducted investigations in relation to various anticompetitive practices among players in the paints industry. This investigation resulted in the highest penalty ever imposed by the CAK, of KES 20.799 million (approx. USD 191,630), imposed on Basco Paints.

The CAK has also conducted investigations into an alleged influx of illegal oil marketers in the country following a petition by a number of oil marketers to the National Assembly. The oil marketers alleged that the market had been penetrated by unlicensed and illegal agents who were supplying jet fuel below the landing cost to the detriment of legitimate suppliers. Following the investigation, the CAK concluded that there was effective competition in the market among the existing oil marketing companies and that the product was price above the landing cost.

The CAK continues to exercise its investigative powers and has looked into various sector players in the maize flour sector, bakery sector, fresh juice production sector and edible oils and fats.

Yes. As mentioned in question 1 above, the Kenyan Competition Act, as amended by the Competition Amendment Act, contains provisions on the abuse of buyer power. The Competition Amendment Act defines buyer power as the influence exerted by an undertaking or group of undertakings in the position of purchaser of a product or service to:

(a) obtain from a supplier more favourable terms; or

(b) impose a long-term opportunity cost, including harm or withheld benefit, which, if carried out, would be significantly disproportionate to any resulting long-term cost to the undertaking or group of undertakings.

Abuse of buyer power is considered an offence under the Competition Amendment Act and the relevant penalties are imprisonment for a term not exceeding five years or a fine not exceeding KES 10 million (approx. USD 86,542), or both. In addition, the CAK can impose a financial penalty of up to 10% of the infringing undertaking’s gross annual turnover for the previous year.

The CAK has investigated various retail companies accused of abusing buyer power by their suppliers, on the basis of failing to settle their invoices promptly or imposing other conditions for the supply of goods which the suppliers believe are unfair.

One of the most prominent cases on buyer power in Kenya is the Majid Al Futtaim Hypermarkets Limited (“MAF”) case in which Orchards Limited (one of MAF’s suppliers) alleged abuse of buyer power by MAF and raised various complaints to the CAK in relation to the supply of its products to MAF’s Carrefour outlets. Based on publicly available information, some of Orchards’ complaints included unilateral delisting, refusal by MAF to take delivery of products, unjustifiable return of merchandise and MAF requiring the supplier to pay a rebate in the form of a listing fee for each product listing. Following its investigations, the CAK found that MAF possessed and abused buyer power and issued various orders against MAF including an order to (i) amend its supply agreements to expunge all provisions that provide for or facilitate abuse of buyer power; (ii) refund rebates deducted from Orchards’ invoices; (iii) pay a financial penalty of 10% of its gross annual turnover in Kenya from its Carrefour franchise from the sale Orchards’ products for the year 2018 in the sum of KES 124,768 (approx. USD 1,071).

MAF appealed the CAK’s decision to the Competition Tribunal that upheld that MAF did indeed have and abuse buyer power. The Competition Tribunal upheld most of the CAK’s orders including that MAF’s supply agreements should be amended to remove the offending provisions and that MAF should refund the deducted rebates and pay the financial penalty imposed by the CAK. Based on publicly available information, this decision is the subject of an appeal.

In the Annual Report for the financial year 2019/2020, the CAK has indicated that it has finalised a total of 18 cases relating to buyer power which shows that CAK has increased its focus in this area. An overview of the recent buyer power cases handled by the CAK shows that 66% of them related to delayed payments, 15% on unilateral termination of contracts, 10% on delisting, 3% on unjust return of goods and 2% each in relation unfair transfer of costs, transfer of risks and imposition of unfair terms in contracts.

Yes. Cartel conduct is criminalised under section 21 of the Kenya Competition Act. Section 21 prohibits restrictive trade practices (i.e., agreements between undertakings, decisions by associations of undertakings, decisions by undertakings, or concerted practices by undertakings, that 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).

Types of conduct listed in the Kenya Competition Act that would apply to cartels or be termed anticompetitive include:

(a) directly or indirectly fixing purchase or selling prices or any other trading conditions;

(b) dividing markets by allocating customers, suppliers, areas or specific types of goods or services;

(c) collusive tendering; or

(d) otherwise preventing, distorting, or restricting competition.

In addition to financial penalties, the Competition Act provides for imprisonment for a term not exceeding five years and a fine not exceeding KES 10 million (approx. USD 92,135) as the criminal penalties for engaging in cartel or anticompetitive conduct. Local counsel are not aware of any instances where criminal sanctions have been imposed on any person or undertaking in respect of cartel or anticompetitive conduct. Local counsel are also not aware of any criminal charges brought or convictions made against any persons and/or entities for engaging in any anticompetitive conduct since January 2019.