KENYA COMPETITION AMENDMENT BILL PUBLISHED

By Tamara Dini Wednesday, July 17, 2019
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The Kenya Competition Amendment Bill, 2019 (Bill), published on 12 July 2019, contains significant amendments to the buyer power provisions of the Competition Act, No. 12 of 2010 (Act).  Based largely on the draft Kenyan Competition (Abuse of Buyer Power) Rules published in early 2018, the Bill seeks to clarify the abuse of buyer power and empowers the Competition Authority of Kenya (CAK) to investigate such conduct and to propose directions.

The salient proposed amendments in the Bill are as follows:

Abuse of buyer power

In terms of the Bill, a separate Section 24A of the Act, dealing specifically with the abuse of buyer power is proposed (currently abuse of buyer power provisions are contained in the section of the Act that deals with the abuse of a dominant position).

The current buyer power provisions remain largely intact. The following additions are proposed:

  • Examples of abuse of buyer power: The amendments contain a number of examples of abuse of buyer power, including delays in paying suppliers without justifiable reason and in breach of agreed terms of payment; unilateral termination, or threats of termination, of a commercial relationship without notice or on unreasonably short notice without an objectively justifiable reason; and the transfer of costs or risks to suppliers by requiring them to fund the cost of a promotion;
  • Agreement between buyer and seller: If the amendments are introduced in their current form, agreements between a buyer and a supplier will be required to contain certain terms, including the terms of payment; the payment date; the interest rate payable for late payment; and the mechanism for the resolution of disputes;
  • Investigations: The amendments provide for the CAK to be able to conduct investigations into alleged abuse of buyer power (in addition to alleged restrictive practices or abuse of dominance);
  • Reporting obligations: The amendments provide for the CAK to be able to monitor the activities of a sector or undertaking likely to experience an abuse of buyer power, and for the CAK to ensure compliance with the Act by imposing reporting and prudential requirements; and
  • Binding codes of practice: The amendments provide for the CAK to be able to require an industy or sector, in which instances of abuse of buyer power are likely to occur, to develop a binding code of practice.

Professional associations

In terms of the Section 22 of the Act, it is compulsory for professional associations to apply to the Authority for an exemption from the Act if their rules contain restrictions which have the effect of preventing, distorting or lessening competition in a market. In terms of the new proposed Section 29A of the Act, it will be an offence for such an association to fail to apply for an exemption, or not to comply with the CAK's decision, which is punishable on conviction by imprisonment for up to five years or a fine of up to KES 10 million, or both.

It is expected that public comment on the Bill will be sought after the first reading of the Bill in Parliament.