Agency orders probe into edible oils cartel

He said that talk of price fixing could have been fed by the fact that the players seem to keep prices of their products close to each other.

“Our sector is tight and if one player sets a low price everyone follows,” added Mr Shah.

But the Monopolies and Price Commission reckons that the market structure of the twin commodities including production and supply chain has offered perfect ground for collusion to fix and charge excessive prices.

Mr Kariuki says that the limited number of wholesalers and manufacturers of sugar and edible oil has reduced competition in the twin industry and offered room for sharing of market information on pricing and production.

For instance, Bidco oil whose flagships include Elianto, Golden Fry, Chipsy and Kimbo has only seven closely knit distributors spread across the country despite the firm controlling about 40 per cent of the local edible oil market.

The same lean distributorship plays out at Pwani oil makers of Frymate, Fresh fri and Mpishi poa as well as at Kapa Oil whose products includes Captain cook, Rina and Soja.

Sources at the commission said there were barriers to acquiring the distributorship deals, which are dominated by friends and relatives.

The entry of new players into the edible oil market to counter the near monopoly held by Unilever, formerly the East African Industries; in the 1990s seem not to have enhanced competition in the market place, suggest the monopolies commission.

In 2002, Bidco Oil acquired Unilever’s then market beater Kimbo.

There are about 35 cooking oil refiners but the market has remained the domain of the three players—Bidco Oil, Kapa Oil and Pwani Oil—who continue to unveil products, making it one of the few sectors that has defied Kenya’s under performing economy to turn up tidy profits.

Consumption and production of edible oils has doubled since 2003 on increased household numbers and is expected to continue rising in line with the population.

Retailers say they have no benefited from the surge in prices of the two commodities over the last three years—a pointer that the gains are being absorbed by the manufactures.

“It does not mean that our margins have risen with increase in prices, most often than not they have dropped,” said Mr Francis Msawili, the general manager of Naivas supermarkets.

The export market for oils has also become a lucrative business with the value of exports nearly doubling from Sh2.5 billion in 2004 to Sh4.8 billion in 2008.

The situation is the same in the sugar sector where the distributorship of the commodity is controlled by few individuals.