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Introduction

The Competition Authority of Kenya (CAK) has proposed a series of changes to the Competition Act Cap. 504 Laws of Kenya (the Act) in response to emerging regulatory issues, such as those presented by digital marketplaces. CAK also aims to incorporate lessons learned from its enforcement experience and international best practices.

Some of the areas that the Bill seeks to amend include abuse of buyer power, mergers, criteria for determining dominant position, and financial penalties.

We will provide an overview of some of the key provisions of the Bill below.

Key Provisions

New Definitions

The Bill introduces some new definitions to the Act. The terms “business consumer”, “digital activities”, “product information standards”, “strategic market position” and “superior bargaining position” have all been introduced to the Act.

Superior Bargaining Position

The proposed Bill aims to replace the term “abuse of buyer power” with “superior bargaining position.” According to the Bill, a superior bargaining position refers to the ability of an enterprise to control, direct, define, or determine business operation conditions with counterparties, in a manner that benefits the enterprise, regardless of its dominant market position or power. The Bill prohibits any conduct that amounts to abuse of superior bargaining position in the Kenyan market or a substantial part of it. The Bill also grants the CAK the power to monitor the activities of any sector or enterprise that it believes is experiencing or likely to experience abuse of superior bargaining position. CAK is authorized to impose reporting and prudential requirements to ensure compliance and establish a code of conduct for such sectors.

Some behaviours that constitute abuse of a superior bargaining position include delays in payment without justifiable reasons, unilateral termination or threats of termination of a commercial contract without adequate notice, unilateral variation of contractual terms, transferring costs to the counterparty, and imposing unfair commercial risks meant to be borne by the other party.

Additionally, demanding preferential terms unfavourable to the other party, setting purchase or service prices below competitive levels, unreasonably collecting and/or processing personal data of the counterparty, imposing unduly difficult conditions for the termination of services, and obstructing business activities or interfering in the counterparty’s management of its business also amount to abusing a superior bargaining position.

Those found guilty of abusing their superior bargaining position can face imprisonment for up to five years, a fine not exceeding KES. 10 million, or both.

Mergers

The Bill proposes adding mergers of institutions that have been privatized to section 41 of the Act, which defines a merger. CAK may also request public input on a proposed merger within 14 days of receiving notification of the proposed merger.

Financial Penalty

The Bill introduces a financial penalty of up to 10% of the immediately preceding year’s gross annual turnover in Kenya for an undertaking that contravenes any lawful order given by CAK under the Act.

Consumer Protection

The Bill proposes to strengthen consumer protection measures, including mandatory disclosure of product information and prohibition of withholding material information about product quality and use.

Conclusion

The Competition Authority of Kenya (CAK) states that the proposed amendments are intended to enhance its ability to carry out its mandate and ensure efficient operation of the Kenyan market.

CAK has invited the public to provide comments on the Bill. Feedback can be submitted through the Bill and Stakeholder Feedback Tool, which is accessible at: Stakeholder Views Collection Matrix.xlsx (live.com).

For More Information Please Contact

kabu.karanja@attorneysafrica.com