The Competition Authority of Kenya’s Informant Reward Scheme became effective on January 1, 2021. Mr. Boniface Makongo, Director, Competition and Consumer Protection, discusses the salient features of the program, including its objective and measures taken by the Authority to safeguard the interests of whistle-blowers.
The Authority’s Informant Reward Scheme Guidelines came into force a few months ago. Kindly give us an overview of what they entail and their main objectives.
The objective of the Guidelines is to enhance the efficiency and effectiveness of the Authority’s enforcement activities, mainly against restrictive trade practices. Such conduct includes agreements between undertakings to fix purchase and selling prices, maintenance of minimum resale prices, controlling production levels and market allocation, and collusive tendering. Their scope extends to misrepresentation and safety of products, abuse of dominance, abuse of buyer power, mergers implemented without approval, and unconscionable conduct.
Specifically, the Guidelines sets out the collection of principles and conditions governing, among others, the processing and granting of rewards to informants, including the role of informants, the expected nature of cooperation, reward payment criteria, and eligible entities.
Is there a legal basis upon which the Scheme rests?
Section 9 of the Competition Act No. 12 of 2010 (the Act) grants the Authority scope to issue Guidelines that provide clarity about various aspects of the implementation of the law. Further, section 33 of the Act also empowers the Authority to collect evidence in an admissible form for purposes of an investigation. It is against this backdrop that the Guidelines have been developed.
Who is deemed as a confidential informant?
A confidential informant is a person, either natural or juristic, who provides relevant, actionable information to the Authority regarding violations of the Act for the purposes of an investigation. This role targets neutral third parties or those playing a peripheral role in the anti-competitive conduct. A confidential informant can be, for example, an employee who was directed by their superiors to attend a meeting between competing firms where price-fixing was discussed but did not actively participate in the decision-making.
Briefly describe the process through which the Authority determines the eligibility and suitability of the confidential informant to participate in the Scheme.
A confidential informant must be privy to intimate insider information. To determine their suitability, potential informants shall be subjected to an assessment to analyze their reliability, nature, and relationship with the subject or target of an existing or potential investigation, criminal history, among others.
What are the obligations of a confidential informant once they are registered on the Scheme?
Informant reward schemes are anchored on trust and cooperation. Therefore, confidential informants, by volunteering to collaborate with the Authority, undertake to always provide truthful and accurate information. Further, they will be expected to abide by the case officer’s instructions. An informant may also be required to testify in a court of law should the need arise. When an informant becomes uncooperative or ceases to provide credible intelligence, the Authority may deactivate them from the program.
What measures has the Authority put in place to ensure that confidential informants are protected and that they are not culpable as a result of their cooperation?
The Authority has established a controlled mode of communication to ensure that the informant’s identity and intelligence is, from the first point of contact, restricted to a single focal point in the Authority. In addition, it is important to note that all employees of the Authority are prohibited by the Act from disclosing information that comes into their custody while undertaking their duties. Further, a secure E-mail address, firstname.lastname@example.org, has been set aside. Lastly, the Authority shall collaborate with other government agencies to ensure that the confidentiality and safety of our informants is guaranteed.
The entire basis of an informant reward scheme is monetary compensation. Kindly explain the salient provisions of compensation as provided for in the Scheme.
An informant who provides credible intelligence leading to the closure of an investigation through penalization is entitled to up to 1% of the administrative penalty imposed by the Authority, but shall not exceed Ksh.1 Million. However, the Authority may decline to make a payment upon obtaining new material evidence that the informant was party to the anti-competitive conduct.
The Authority has been operating a leniency program since 2016. Kindly highlight the salient differences between the Informant Reward Scheme and the Leniency Programme.
The difference between the two programs is that with the Leniency Programme (LP), the concerned party is a participant in the anti-competitive conduct whereas informants are not. Under the LP, parties found to have participated in anti-competitive conduct apply for graduated reliefs on the amount of penalty imposed. As for the informant reward scheme, the Authority shall procure actionable information in exchange for money.
Based on your response, if a businessperson has been involved in anti-competitive conduct, such as participating in cartel-like conduct such as price-fixing or market allocation, they are not eligible to apply to become an informant but can apply to be granted leniency. Is that factual?
Yes, this is the position. Leniency applies to undertakings who have been actively involved in the violation of the Act i.e. involved in the decision-making process. The informant reward scheme, on the other hand, is targeted at those in the periphery, neutral third parties who are not directly involved in contravening the Act.
What are some of the challenges you foresee in the implementation of this new enforcement tool?
Given that it is a new program, it is expected that some interested parties may be cautious or apprehensive to apply due to worrying about their safety and their identity being disclosed. We shall however sensitize the public about the program, including clearly elaborating the provisions.