The Competition Authority of Kenya (CAK) has warned retailers and other businesses that they risk fines of up to Ksh10 million or five years in prison if found imposing unfair commercial terms on suppliers.
The authority said the penalties could apply to businesses found abusing their buyer power through practices such as delayed payments, demanding rebates and promotional contributions, and shifting operational costs to suppliers.
In a cautionary notice issued on Wednesday, November 11, CAK said it had identified continued instances of commercial terms being imposed on suppliers in the retail sector, raising concerns over possible violations of the Competition Act.
The authority also flagged extended payment periods and unfavourable conditions in joint business plans between retailers and suppliers as practices that could amount to abuse of buyer power.
"Terms should not be dictated by a buyer merely because it enjoys buyer power," CAK stated, adding that suppliers must be given an opportunity to consider, discuss and negotiate the conditions of their agreements.
At the same time, the authority clarified that it had not issued any directive requiring suppliers in the retail sector to enter into joint business plans with retailers, insisting that such arrangements must be voluntary.
CAK further warned that signing a supply agreement does not automatically mean its terms were fairly negotiated or that the arrangement complies…
