Businesses that exercise unfair competitive advantage over their suppliers will now contend with hefty fines and possible jail terms according to a new bill proposed by the Competition Authority of Kenya (CAK).
According to the Competition Amendment Bill, 2024, business persons will be liable to imprisonment for a term not exceeding five years or to a fine not exceeding Ksh10 million or to both for several offences.
Some of those offences include; delays in paying suppliers without justifiable reason or breach in contract or terms of agreement.
Other violations listed in the proposed piece of legislation include; unilateral termination or threats to terminate a commercial relationship without notice or an unreasonably short notice period without a justifiable reason.
Further, businesses that use unfair bargaining power to transfer costs and commercial risks to a counterparty will be deemed to have violated the law, if the bill is passed.
Businesses will also be barred from demanding preferential terms which are unfavourable to the counterparty.
The Bill also outlines that businesses will not be allowed to impose purchase prices below competitive levels or service fees above competitive levels.
Further, the Authority seeks to regulate competition in the Kenyan business landscape by limiting the unreasonable collection and/or processing of data of the counterparty.
Businesses will also be limited from imposing unduly difficult conditions for the termination of service; and obstruction of business activities or interference in the counterpart’s management of its business.
“A person who contravenes the provisions of subsection one commits an offence and shall on conviction be liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten million shillings or to both,” the bill reads in part.
The creation of the amendment follows a landmark ruling where a popular supermarket chain was fined Ksh1 billion under the charges of exercising unfair competitive advantage.
According to the statement issued by the Authority in December, the chain was accused of transferring the retailer’s costs to two of its suppliers.
