Since the World Health Organization (WHO) announced the Covid-19 pandemic, Governments, institutions, businesses and the public have been forced to change the way they live and operate. To date, there is no vaccine and no specific antiviral medicines against COVID-19.
The Covid-19 pandemic provides an opportunity for unscrupulous businesses to engage in anticompetitive practices to the detriment consumers, a possibility that has necessitated the intervention of Governments and competition agencies across the World.
Following the confirmation of the first COVID-19 case in the country, the Authority issued a Cautionary Notice against manufacturers and retailers against collusive increase of prices and/or hoarding with the intention of increasing prices of various essential goods. The Notice further called upon members of the public to be vigilant and report any suspected contraventions to the Authority.
Accordingly, and in line its consumer protection mandate, the Authority heightened its market vigilance through investigations across the country.
On 16th March 2020, CAK issued a remedial order against a local supermarket retailer after it was established that the retailer had engaged in unconscionable conduct contrary to the provisions of Section 56 of the Competition Act of Kenya.
Specifically, Cleanshelf Supermarkets was found to have unconscionably raised the prices of Tropikal brand hand sanitizers. CAK observed that: ‘Cleanshelf Supermarkets normally retails the specific hand sanitizers at Kes. 800/=. However, the Authority has determined that the retailer on 15th March 2020 sold the same batch of product to consumers at varying amounts above Kes. 800/=, including Kes. 1000/=, with the prices increasing within hours’. Cleanshelf was ordered to CONTACT AND REFUND ALL the consumers who purchased the 960 pieces of the Tropical brand hand sanitizers above the usual selling price and submit evidence to support the same by 26th March 2020.
As a result of the countrywide investigations, the Authority also established that some manufactures had entered into exclusive agreements that facilitated allocation of distributorship territories, brand exclusivity, quantities supplied. These manufacturers deal in essential commodities such as maize flour, wheat flour, edible oils, rice, sanitizers and toilet papers. Their exclusive agreements deter manufacturers of competing brands from accessing the same distributors to deliver their products to retail outlets contrary to Section 21(1) of the Competition Act, No.12 of 2010’.
The Authority therefore issued a Cease and Desist order on 23rd March 2020 to the manufacturers and distributors, warning them to expunge such exclusive clauses from their contracts unless they apply for and receive an exemption from the Authority.
In instances where competing businesses seek to collaborate with the aim of increasing the efficiency of the supply chain of essential goods and services that would reduce the impact of the Covid-19 pandemic, and they are uncertain about the compatibility of their actions with the Competition Act, they can seek an advisory opinion from the Authority.
This informal guidance is offered free of charge. If they apply for an exemption under Section 26(3) of the Competition Act, the Authority will consider the application based on whether there are exceptional and compelling reasons, such as public benefit, to grant such an exemption.
By Vellah Kedogo, a former CAK Young Professional