Maker of Darling braids faces abuse of dominance fine

Synthetic hair manufacturer Style Industries, maker of the popular Darling brand of hair extensions, has entered into financial settlement negotiations with the government competition watchdog following allegations that it abused its dominance in the market.

The braid and weave manufacturer was accused of engaging in restrictive trade practices by rival firm Solpia Kenya, makers of Sistar synthetic hair.

According the Competition Authority Kenya (CAK) annual report, the agency commenced investigations into Style Industries for abuse of dominance practices in violation of Section 24(1) and (2)(b) of the Competition Act.

Styles Industries was accused of abuse of dominance because of conduct said to have involved threatening shops that stocked the complainant’s products with account closure, removal of discounts and refusal to supply products.

“Solpia Kenya complained to the Authority alleging that Style Industries were engaging in RTPs (restrictive trade practices), including, imposing unfair selling prices and conditions to suppliers who sell their products, blackmail to the existing Solpia clients, and applying harsh conditions to suppliers who supply Solpia's goods,” said the CAK.

According to the Competition Act, a business is dominant when it controls more than half of the market. Abuse of one's dominant position is one of the restrictive trade practices prohibited by the Competition Act.

“Settlement negotiations pursuant to Section 38 of the Act was on-going at the close of the reporting period,” said CAK in its annual report.

Section 24 (2) (b) defines abuse of a dominant position to include — limiting or restricting production, market outlets or market access, investment, distribution, technical development or technological progress through predatory or other practices.

The section states that CAK may at any time, during or after an investigation into an alleged infringement of the regulations, enter into an agreement of settlement with the undertaking or undertakings concerned.

This may include an award of damages to the complainant or any amount proposed to be imposed as a pecuniary (financial) penalty.