Rotich ordered to appoint chair for airlines case panel

The High Court has ordered Treasury secretary Henry Rotich to appoint a Competition Authority tribunal chairman within 60 days to hear a dispute between the International Air Transport Authority (IATA) and the market watchdog.

Justice George Odunga issued the order in a suit challenging the watchdog’s ruling in which it accused IATA of restrictive trade practices.

IATA consequently moved to court seeking to compel CAK to appoint a chairman to hear its appeal on the dispute.

The competition watchdog ruled in August that IATA was in breach of the law by compelling local travel agents to get guarantees from one firm – Saham Insurance Ltd – for ticket stocks they receive from global airlines.

Justice Odunga ordered Mr Rotich to appoint a chairman after CAK failed to defend the suit.

“In the absence of any explanation from the CAK, this court cannot fathom the reason warranting it being absolved from the performance of their duties. I grant an order compelling the Treasury to appoint the chairman of the competition tribunal within 60 days,” he ruled.

To operate as a local travel agent, companies are required to produce a bank guarantee of about $1.5 million (Sh133.2 million).

Most travel agents could not afford this financial security, which prompted IATA and the Kenya Association of Travel Agents (Kata) to come up with an alternative where travel agents would buy credit insurance instead of the Sh133 million bank guarantees.

This arrangement is known as the default payment programme and IATA – through a London-based insurance company – restricted the local contract to Saham Insurance Ltd.

But allegations of foul play in the procurement of the insurance company were raised by Kata after bids from ICEA-Lion and Xplico Insurance reportedly failed earlier this year.

READ: IATA sues watchdog on anti-competition claim

CAK ordered IATA and Saham to sever their insurance dealings until the watchdog completes its investigations into the allegations of restrictive trade practices, which could have locked out other parties from offering the services to IATA.

But IATA claims it was not given an opportunity to respond to the restriction claims, and that CA acted outside the rules of natural justice in stopping its relationship with Saham.

Justice Odunga said it is unfair for the CAK tribunal members to continue drawing salaries and allowances without working. The lack of a chairman has prevented the tribunal from sitting, a situation that has created a massive backlog of matters awaiting determination.

Retail chain Tuskys, for instance, has challenged the watchdog’s decision to stop it from acquiring six Ukwala supermarket stores in Nairobi’s central business district but the matter has also fallen casualty to the tribunal’s inability to sit without a chairman.

“To keep them in office with no work to do while drawing allowances from the public coffers is clearly contrary to the Constitution, which stipulates that public money shall be used in a prudent and responsible way and that financial management shall be responsible,” the judge said.