Corporate

Competition watchdog has more industries in its sights

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Director-General of the Competition Authority of Kenya, Wang’ombe Kariuki. FILE PHOTO | NMG

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Summary

  • Business Daily sat down with CAK Director-General Kariuki Wang’ombe to discuss the evolution of the anti-trust body which is rattling corporates from banks to insurance companies and even State tenderpreneurs.

This year the Competition Authority of Kenya (CAK) received 314 consumer rights cases, a 129 percent jump from a similar period last year with the authority attributing the rise to consumers learning about its watchdog role.

CAK Director-General Wang’ombe Kariuki discusses a new strategy that has seen the anti-trust body rattling more corporates — from banks to insurance companies.

You are really expanding into new places. We saw you going after banks with hidden mortgage fees. What are some of the infractions you noticed?

We focused on the documents provided to consumers when getting facilities. The law is very clear that in terms of the rates which should be explicit without dripping charges, where after you append that signature others come on board. Even if there are charges you have to be given adequate notice.

The other issue is if you want to move to another bank and move with your facility. We could see some of the providers were taking a lot of time so that they can tie you there.

We told them those provisions that were not clear they have to redo them so that consumers really know what they are buying. Don’t make it fine [print], make it bold.

Why allow them to just change terms and not punish them?

We prefer solving the problem rather than a case-centric approach. I am usually more comfortable when I go home and have solved a problem in terms of providing mortgages in this country within two weeks rather than going to a court and then we are back and forth for three years pretending how I am working.

Some of the things we realised in terms of avoiding adjudicatory rigmaroles, back and forth, is let’s just focus on areas we can solve a problem and move on.

Even when you do fine corporates the fines have been a slap on the wrist. Why is this the case?

Our statutes talk about the relevant turnover. Take a beverage company with three-four brands, and it is only one soda which is found to have a particle.

Is the relevant turnover all the sodas of that company or the brand of the one that has been found, or only one soda which was found with that particle?

The criteria we have been using is that of the of brand, not the entire company turnover.

We also consider whether there has been harm on the consumer, whether the party denied the allegations and cost us money and time to solve the issue.

So far most have agreed to settle and we have been charging between three to four percent of that relevant turnover although law allows up to 10 percent.

Then the other issue is has there been any harm to the consumer? Did the party refute the allegations and there was back and forth and we spent a lot of money trying to sort this problem if the answer is no?

What if they keep repeating [breaches] due to the low fines?

We have what we call recidivism. If you have repeated the offence and have a recidivism issue if we fined you five percent of the relevant turnover you will go with 10 percent. That is a consideration we make. But I am not naming names

Over the decade CAK has been operating you have evolved your watchdog role across industry and now you plan to expand into new areas. What is the focus of the authority going into the future?

The ambition in our new strategic plan is to expand enforcement focusing on emerging areas such as the digital economy, impact of data accumulation on competition and where the government may be losing a lot of money in public procurement because of bid-rigging.

The other area we want to focus on is the abuse of buyer power. There has been a lot of focus on the retail sector and we now want to expand it to other areas. As you can see in the last few months we have focused on abuse of buyer power in the insurance sector.

We also want to focus on platforms, what we call critical trading partners, in terms of how they are abusing their superior bargaining position. If at all you want to buy USSD from firms like Safaricom, how much are they selling the USSD rates to you, especially the SMEs.

Speaking of Safaricom, you have been accused of failing to act despite the outcry from Airtel over dominance. Now that Safaricom is expanding its M-Pesa platform how will CAK handle it going into the future?

The current competition laws are not competent to handle the competition issue the platforms are causing. If you read, worldwide, platforms are causing a lot of sleepless nights to the competition agencies, not only in Kenya.

Competition laws currently focus on dominance and if at all you have not abused that dominance then we should not intervene.

However, you might not be dominant but you have a strategic market position in the services you are offering and your platform may be critical to the existence of other businesses or some services are systemic to the mwananchi. Or in the course of your work you might have accumulated data which is giving you an advantage over the other people.

We are having some discussions across the whole world that in such a situation where a person has a strategic market position how do you approach it?

And there are some considerations we are thinking about, interoperability for instance. But it should be consumers who should push for interoperability not the competitors who have not been able to invest in the infrastructure.

Another area you seem to be having a challenge is price-fixing among professionals. We are seeing engineers and accountants who want to set minimum prices. Do you think they are justified?

Anybody setting minimum prices, including for professional services, have to seek exemption from us so that we can see if it aims at encouraging competition, maybe maintaining standards in certain professional services but not maintaining lifestyles of some professional service providers.

In the last few months, we have seen three buildings collapsing in Kiambu County. Is it because there were no minimum charges? Did they announce these are the professionals who approved this and what kind of sanctions did they mete out?

What we are telling them is, come up with statistics, tell us building A, B, C has collapsed because it had been approved by someone who had not eaten for three days or who had not been able to do research in terms of what kind of construction is supposed to be approved.

They should improve their disciplinary processes, not tell us the minimum fees will help solve this because I can set my office past Moi Avenue and still offer good standards. And I can set up my office at Dennis Pritt Road and then you are telling me we charge the same prices. It does not make sense.

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