Tuskys and Ukwala supermarkets fined Sh5.3M for unfair trade practice

Posted on June 3, 2014

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COMPETITION AUTHORITY FINES SUPERMARKETS KSHS. 5.3M FOR CONTRAVENTION OF THE COMPETITION ACT NO.12 OF 2010

The Competition Authority of Kenya has imposed a financial penalty of Kshs. 5.3 Million shillings to Tusker Matresses Limited (TML) and Ukwala Supermakets Limited (USL) for engaging in a horizontal restrictive trade practice. A preliminary investigation into the matter was initiated pursuant to the Authority’s mandate under section 31 of the Competition Act established that:-

i)                   The parties are competitors, in a horizontal relationship both being Supermarket chains with branches in the Nairobi Central Business District;

 

ii)                 The Arrangement, allowed TML to manage three (3) USL Stores for a period of nine (9) months.

 

iii)              This was after TML investing up to Kshs.200 Million.  The Arrangement would involve TML making decisions on acquisition of stock, setting prices, payroll management, staff re-organization, deployment of technology, rebranding, settling any third party costs of the three stores and generally put TML’s senior Managers in charge of the day to day management of the stores.

 

This preliminary investigation further established that the Arrangement amounted to a horizontal restrictive practice in contravention of section 21(3) (a) as read together with (e) of the Competition Act to the extent that it allowed TMLB to set the prices and other trading terms, of a competitor in addition to managing the three USL Stores, in terms of marketing and management systems.

Hence,having regard to the provisions of section 38 of the Competition Act the Authority imposed a financial penalty in the sum of Five Million three hundred thousand shillings (Kshs.5, 300, 000) and the parties have thus far complied by paying the same amount to the Authority in full and final settlement in respect to the Authority’s Investigation.

The Authority wishes to highlight that the financial penalty in this case, and in any horizontal restrictive trade practice, is based on the affected turnover, the duration of the conduct and mitigating factors (as presented by the parties). The Authority further took consideration of the need to incentivize acceptance by the firms of the new competition regime and settlement with the Authority rather than lengthy litigation, which may derail the Authority’s focus of working for more competitive outcomes within the shortest time period.

For more Information please contact:

Head of PR & Communication,

Lizz Ntonjira 0711 337 310, 020 2779107

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