The Competition Authority of Kenya (CAK) issued the warning on Wednesday, November 11, following concerns over growing cases of buyers imposing unfavourable conditions on suppliers in the retail sector.
In a notice, the authority revealed that some retailers had been shifting operational costs and business risks to suppliers, demanding rebates and promotional contributions, and extending payment periods without fair negotiations.
CAK said such practices could amount to abuse of buyer power, particularly where businesses take advantage of their stronger bargaining positions to impose conditions that disadvantage suppliers.
The authority identified several prohibited practices, including delaying payments, terminating supply contracts without proper justification, rejecting delivered goods contrary to agreed terms and demanding preferential commercial arrangements.
Other concerns include restricting suppliers from selling their products to competing buyers and forcing them to shoulder expenses that should ordinarily be handled by retailers.
CAK Director General David Kemei's authority emphasised that supply agreements must be reached through genuine negotiations and mutual engagement rather than buyers dictating terms because of their market influence.
The regulator also clarified that suppliers were not legally required to sign joint business plans with retailers, insisting that such arrangements must remain voluntary.
It further cautioned that having a signed agreement does not automatically establish that its conditions were fairly negotiated or comply with competition laws.
CAK announced that it was intensifying market surveillance and examining commercial arrangements within the retail industry. Businesses found to have violated the law will face investigations and possible enforcement action.
Under the Competition Act, offenders risk a criminal fine of up to Ksh10 million, imprisonment for a maximum of five years, or both.
The authority can also impose administrative financial penalties of up to 10 per cent of a company's gross annual turnover in the preceding financial year.
CAK urged suppliers experiencing unfair treatment to retain relevant evidence, including contracts, payment records, correspondence and joint business plans, which could support investigations.
Retailers and other buyers were also directed to review their supply agreements and ensure their dealings comply with competition regulations.
https://nairobileo.co.ke/news/article/31403/govt-warns-retailers-of-ksh10-million-fine-jail-over-unfair-deals-with-suppliers
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