Oil marketer Total Kenya #ticker:TOTL has been ordered to strike out anti-competitive clauses in its agreements with dealers.
The Competition Authority of Kenya (CAK) said the firm had in its contracts a clause that forbid dealers from operating a competitor’s outlet within a radius of 20 kilometres.
“The Authority received an anonymous complaint regarding the dealership arrangement between Total Kenya Limited (Total) and its dealers. It was alleged that Total was engaged in anti-competitive practices specifically in relation to its rental policy and discriminative treatment of its Commercial and Young Dealers (YD),” said the Authority in its annual report.
The YD programme by Total “gives business opportunities to young Kenyans with capital support for station dealership while they gain the experience and stand-alone financial strength to stand on their own.”
According to the firm’s website, “the careers of service station staff chosen for this programme are developed through training with the aim of becoming independent financial dealers over time, through disciplined savings of part of their profits, towards building their working capital.”
The CAK ordered that Total expunge the clause after investigations showed that the dealership agreements contained “unreasonable and anti-competitive provisions”.
The clause is in contravention of the Competition Act, section 21 which defines restrictive trade practices as those that lessen competition to the detriment of consumers.
A company that limits or controls production, market outlets or access, technical development or investment is engaging in restrictive practices. The Competition Act also prohibits price fixing, allocation of territories or consumers, collusive tendering and maintaining of minimum resale prices.
A firm engaging in these practices, upon conviction, faces imprisonment for its directors for a term not exceeding five years, a maximum fine of Sh10 million or both.