CAK is offering penalty waivers to firms that self-report cartel behaviour to the agency.
The regulator is seeking a different approach to root out collusion across various sectors of the economy.
Firms are expected "to provide direct evidence and pro-actively cooperate in bringing successful enforcement action in return of full or partial immunity.
The Competition Authority of Kenya (CAK) is offering penalty waivers to firms that self-report cartel behaviour to the agency and provide evidence against other members.
The offer is contained in the regulator’s new leniency programme, which is offering full or partial immunity to entities engaging in restrictive trade practices, cartel-like behaviour and abuse of dominance. Through the programme, the authority is seeking a different approach to root out collusion across various sectors of the economy.
Companies willing to work with the authority are expected "to provide direct evidence and pro-actively cooperate in bringing successful enforcement action in return of full or partial immunity", says CAK.
The move is expected to catch restrictive business malpractices such as price-fixing and collusion in tendering. Firms that report themselves to the authority will escape punitive fines and other sanctions.
Usually, companies found culpable can be fined up to 10 percent of gross annual sales for the preceding year and their top officials face a five-year imprisonment.
“As a director of the business involved in cartel-like conduct, you can be jailed for up to five years upon conviction, fined a maximum of Sh10 million, or both,” says CAK.
The first entity to self-report will be granted 100 percent reduction in penalties while the second applicant may be granted up to 50 percent. The third applicant will qualify for up to 30 percent reduction in penalties. Subsequent applicants will get up to a 20 percent reduction.
Conditions
The watchdog has, however, set strict rules about how firms can be granted amnesty. To benefit from the leniency programme, an entity must be the first in its sector to inform the authority of the undetected cartel.
The applicant must then fully cooperate with the authority by surrendering all evidence in its possession and stop the infringement immediately. Such an entity will also have to desist from divulging details of the investigation to third parties. A breach on any of these pre-conditions will lead to revocation of the amnesty.
Restrictive trade practices are punishable by law since they limit access to competitive markets, constrain business operations and slow down productivity. Consumers are also denied choice, quality and innovative products and services.
CAK's annual report indicated that the advertising sector topped the number of restrictive trade investigations by the regulator in the last year.
Research by the authority shows that eliminating restrictive trade practices would grow the economy by between 3 and 13 percent over seven years.
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