Economy

CAK relaxes business competition rules to spur Covid recovery

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CAK Director-General Wang’ombe Kariuki. FILE PHOTO | NMG

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Summary

  • Companies will be allowed to temporarily collaborate in their business operations to aid recovery from the disruption caused by the Covid-19 pandemic.
  • The CAK said it would relax its laws on restrictive trade practices to spur recovery in certain critical economy sectors including manufacturing, private healthcare and research services, horticulture, aviation and tourism.

Companies will be allowed to temporarily collaborate in their business operations to aid recovery from the disruption caused by the Covid-19 pandemic.

The Competition Authority of Kenya (CAK) said it would relax its laws on restrictive trade practices to spur recovery in certain critical economy sectors including manufacturing, private healthcare and research services, horticulture, aviation and tourism.

The Competition Act prohibits restrictive trade practices such as sharing of strategic market information, joint distributorship and supply agreements including marketing or sales strategies and also research into new markets.

“However, the authority(CAK) is cognisant of the fact that the Covid-19 pandemic has impacted businesses negatively, reducing their capacity to penetrate and expand into new markets and, to some extent, depriving them the capacity to adequately serve all the geographical markets in Kenya,” CAK Director-General Wang’ombe Kariuki said.

Section 30(2) of the Competition Act allows for exemptions from restrictive trade practices with the approval of Finance Cabinet Secretary.

CAK said it has prepared a Draft Block Exemption Guidelines for post Covid-19 economy and eyes approval by the CS.

Under the stop-gap deal, firms in the manufacturing, healthcare, logistics and aviation sectors will be able to share strategic market information, carry out joint distribution and supply agreements, marketing, sales and research into new markets.

“This is a window in which businesses are expected to present exemption applications” Mr Kariuki said.

The regulator said the key considerations when making a determination of exemption shall include public participation and the extent to which the envisaged cooperation would ensure availability and accessibility of goods and services to the public, especially vulnerable groups.

Companies in the manufacturing sector operating at the same market level, for instance will be allowed to make and distribute furniture, stationary, beverages, uniforms, ventilators, medical equipment for public institutions including government hospitals and schools.

However, their joint market shares should not exceed 15 percent on the basis of the average market sales.