The Competition (Amendment) Act 2016

The Competition (Amendment) Act, 2016 was passed into law in December 2016 and effectively commences on the 13th January, 2017. The law amends the provisions of the existing Competition Act, 2010. The purpose of the Competition Act is to, promote and safeguard competition in the national economy, protect consumers from unfair and misleading market conduct and, establish the Competition Authority and the Competition Tribunal.

A number of key changes have been introduced in the Competition Act, 2010 as follows:

The definition of the term “undertaking” has been modified to include, any individual, a body corporate, incorporated body of persons, trade association or a trust.

The law now has placed an obligation to every person, undertaking, trade association or body to provide information requested by the Authority in fulfilment of its statutory mandate for conducting an inquiry or sectoral study.

Abuse of “buyer power” has now been recognized as one of the restrictive trade practice and prohibited. It is defined as “the influence exerted by an undertaking or group of undertakings in the position of a purchaser of a product or service to obtain from a supplier more favourable terms, or to impose a long term opportunity cost including harm or withheld benefit which, if carried out, would be significantly disproportionate to any resulting long term cost to the undertaking or group of undertakings”.

In determining buyer power, the Authority is now required to take into consideration the following factors,

  • The nature and determination of contract terms;
  • The payment requested for access infrastructure; and
  • The price paid to suppliers.

In addition, the Authority now has the mandate to develop rules on restrictive trade practices, in consultation with the Cabinet Secretary, other relevant government agencies and stakeholders, to develop rules for the better carrying out of the provisions restrictive trade practices.

The law has introduced additional measures to address uncompetitive trade practices which are;

  • Prohibition (s) can be issued in cases where there is infringement of abuse of dominant position.
  • Imposing of a financial penalty of up to 10 percent of the immediately preceding year’s gross annual turnover in Kenya of the undertaking or undertakings in question.

Under control of mergers, the new provisions introduced are;

  • “Business” and “assets” have been included in addition to share capital in determining whether ownership is more than one half of the undertaking to assess any of the restrictive trade practices.
  • In merger cases, parties may upon receipt of a written decision from the Authority on a merger, file an appeal with the Competition Tribunal to that decision.
  • A fine not exceeding 10 million shillings or to imprisonment for a term not exceeding 5 years, or to both has been introduced in cases where the Authority revokes a merger and it is found that a person who, being a party to a merger gave materially incorrect or misleading information or fails to comply with any condition attached to the approval for the merger.

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