The Kenya Competition Authority (CAK) fined an association of suppliers Ksh 408,000 for alleged exploitation of Kenyans.
In a gazette notice dated Friday August 2021, CAK found the Energy Dealers Association (EDA), a conglomerate of 32 small-scale suppliers and distributors, guilty of instigating the illegal plot to exploit Kenyans in following investigations.
The 32 players are accused of having agreed to set the minimum prices for 6kg and 13kg bottles of liquefied petroleum gas (LPG). The suppliers demanded to enter into a settlement agreement in which they were fined Ksh 408,000.
File image of various brands of LPG gas cylinders on display
“The association has paid a financial settlement of 408,000 Ksh which is equivalent to 5 percent of the relevant annual turnover and has undertaken not to engage in anti-competitive behavior.”
CAK explained that even though there was no evidence that the suppliers had proceeded with the implementation of the proposals, the intention was contrary to section 21 of the Competition Act, which prohibits restrictive business practices. .
More specifically, it was found that the association had advocated for the enactment of the Energy Dealers Act 2019 with the aim of recommending pricing formulas to its members.
Restrictive business practices are all the habits used by a player in any industry to give it a competitive advantage over another while doing business. This includes collusion to fix the prices of a product.
Following the fine imposed on them, EDA undertook to set up a competition compliance program to make its members and their staff aware of the provisions of the law.
LPG prices have increased following the introduction of a 16% value-added tax by the Kenya Revenue Authority (KRA) in April 2021. KRA said the new tax will take effect on July 1.
Kenyans would be forced to part with an additional 300 Ksh when they buy 6 kg or 13 kg of gasoline, which were among the zero-rated items.
In February, the Kenya Bureau of Standards (KEBS) called on stakeholders in LPG gas companies and oil tankers to use reinforced steel to minimize explosions.
The new LPG depot under construction at the Wambugu farm in Nyeri County, seen on Friday May 15, 2020