The Special Compliance Programme (SCP), which began on July 1, has elicited “good response” from some of the targeted bodies but CAK says many others have ignored the call and face investigations in the second quarter of next year.
The compliance programme involves reviewing memorandum documents, minutes of meetings and verbal agreements and submitting them to the regulator for scrutiny against the law.
The exercise, if successful, could offer relief to Kenyan consumers who have for years been paying high prices for financial services and agricultural produce because of rules set by sector associations.
Several powerful associations in the banking, insurance and agriculture sectors are yet to take advantage of an amnesty given by the competition watchdog to stop cartel-like practices, which puts them on a collision course with the regulator beginning March 1.
The Competition Authority of Kenya (CAK) offered the bodies an eight-month window to dismantle cartels that fix prices and limit competition.
The Special Compliance Programme (SCP), which began on July 1, has elicited “good response” from some of the targeted bodies but CAK says many others have ignored the call and face investigations in the second quarter of next year.
“There still are some high-profile associations in the two sectors (banking and insurance) who have not submitted their documents for scrutiny. The top associations in the agriculture sector have also approached us but many more are yet to,” said the CAK director-general Wang’ombe Kariuki in an interview.
Some financial services bodies that have submitted their documents for review include the Kenya Bankers Association (KBA), the Association of Kenya Reinsurers, the Association of Kenya Insurers and the Kenya Forex Bureaus Association.
The Cereal Millers Association, the East African Tea Trade Association, the Kenya Coffee Traders Association and the Agrochemicals Association of Kenya are among the 80 agricultural bodies that have sent in their files for assessment.
The compliance programme involves reviewing memorandum documents, minutes of meetings and verbal agreements and submitting them to the regulator for scrutiny against the law.
Mr Kariuki says they are reviewing the documents submitted and giving feedback on the offending clauses that need to be dropped by end of February 2016.
The exercise, if successful, could offer relief to Kenyan consumers who have for years been paying high prices for financial services and agricultural produce because of rules set by sector associations.
Financial penalty
The competition law also allows the authority to impose a financial penalty equivalent to 10 per cent of a firm’s sales. In the case of trade associations, which do have direct sales, the authority can charge each member firm.
“In the coming year, one of our main focuses will be those trade associations that have not complied with the compliance programme and yet they hold significant clout in those sectors,” said Mr Kariuki.
Trade associations taking part in the exercise are required to hire auditors and legal experts to review their regulations and business agreements.
Some rules that are bound to get associations in trouble are prescription of geographic trading blocks, maximum market shares and minimum and maximum prices.
Others are recommending pricing formulas and terms of sales such as discount, credit, delivery as well as product and service guarantee terms to members.
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