The Competition Authority of Kenya (CAK) has warned retailers that imposing unfair commercial terms on suppliers could breach the Competition Act, with penalties of up to KSh10 million and possible imprisonment of up to five years.
Director General David Kemei said supply agreements must arise from genuine, voluntary negotiations conducted in good faith, and that the mere existence of a signed contract does not guarantee fairness.
The regulator identified several practices that may constitute abuse of buyer power, including shifting operational costs and risks to suppliers, demanding rebates or promotional contributions, extending payment periods, and imposing unfavourable terms through joint business plans.
Additional concerns listed by Kemei involve delayed payments, unilateral contract termination or threats thereof, refusal to receive goods without valid reasons, and restrictions on suppliers selling to competing buyers.
While CAK encourages written supply agreements, it clarified that it has never required retailers to enter into joint business plans with suppliers, and such arrangements must remain voluntary.
The authority said it will monitor commercial practices in the retail sector, conduct market surveillance and investigate specific retailers where evidence points to violations, with possible administrative penalties of up to 10 per cent of the company's gross annual turnover in the preceding financial year.
Suppliers were urged to retain drafts, signed agreements, joint business plans, correspondence and payment records to support any complaints or investigations.
CAK’s mandate includes promoting competition in the national economy and protecting consumers from unfair and misleading market practices.
