KENYA: COMPETITION AUTHORITY OF KENYA ISSUES A REMINDER TO PROFESSIONAL ASSOCIATIONS TO AVOID SETTING MINIMUM FEES/PRICES
Earlier today (5 October 2021), the Competition Authority of Kenya (CAK) issued a reminder to professional associations to continue to comply with the provisions of the Competition Act 12 of 2010 (Act). This follows the CAK having taken note of a renewed momentum by professional associations seeking to set minimum prices/fees chargeable by their members.
The CAK warns that the Act applies to undertakings, as well as associations of undertakings, carrying on business for gain or reward, in Kenya.
More generally, the Act prohibits decisions by an association of undertakings from engaging in any conduct that has as its object or effect the prevention, distortion or lessening of competition. More specifically, the Act prohibits competing undertakings from fixing a purchase or selling price or any other trading condition, under the auspices of an association. Also prohibited is the practice of minimum resale price maintenance.
Typically, a decision by an association of undertakings is one that reflects an association’s desire to coordinate its members’ conduct. Where the association is constituted of competing undertakings, the competition law risk is far greater.
The CAK warns that setting of a minimum fee/price chargeable by competing members may amount to price fixing and undertakings that engage in such conduct run the risk of attracting a financial penalty of up to 10% of the preceding year’s gross annual turnover. Moreover, any person who engages in such conduct commits an offence and may be liable, on conviction, to imprisonment for a term not exceeding five years or to a fine not exceeding KES 10 million, or both.
Professional associations may, however, legitimise their price fixing, if an application for exemption (from the ordinary application of the Act) is sought from the CAK. In these circumstances, the CAK may grant an exemption if the conduct is reasonably required to maintain professional standards or the ordinary function of the profession.
To be noted, however, is that a professional association is limited to a body established or registered under any law in respect of recognised professions, but does not include trade associations and industry lobby institutions, whether incorporated or not.