NAIROBI, Kenya, June 21 – The Competition Authority of Kenya(CAK) says it has facilitated the release of Sh38 million to 20 motor repairers and 18 motor vehicle assessors who were shortchanged by 18 major insurance companies.
CAK secured Sh30 million in the 2021/22 financial year an increase from the Sh8million recovered during the previous year.
During a media briefing held on Tuesday, Priscillah Njako, CAK manager in charge of the Buyer power department indicated that through the exercise, the authority salvaged over 1,000 jobs and operations of businesses that were owed for services rendered and completed up to five years ago.
The names of the insurance companies were not revealed as the authority noted it was concluding other complaints received by other similar businesses.
Njako decried that there had been increased cases of large businesses failing to honor agreement terms with their suppliers, mainly SMEs with the belief that the suppliers do not have legal recourse.
“Such actions place thousands of livelihoods at risk since their sources of income come under unbearable and unjustifiable financial strain. Big businesses are therefore reminded of their obligation to abide by the competition Act and honor their supply agreements, “she said.
She, however, urged small businesses in the insurance and retail sectors to always keep written contracts between parties, an issue she said has been a key challenge to effective enforcement with 85 percent of the investigated cases lacking contracts.
“We are encouraging market players and retailers to always have a record, this is a challenge for many businesses who prefer to operate on the basis of the owner, an instance which encourages abuse of power,” she remarked.
The Authority, according to Njako relied on local purchase orders, invoices, and credit notes among other commercial documents to construe the terms of the contract between the parties.
In most cases, she noted that the absence of written contracts has been used by powerful buyers to vary contracts at will.
Of all the abuse of power cases reported in the 2020/21 financial year, the Insurance and retail sectors reported the highest cases at 38 percent followed by the manufacturing, telecommunication, construction, energy, agriculture, and horticulture sectors which cumulatively accounted for 24 percent of the cases.
In the 15 percent of cases where contracts were found to exist, all were standard term contracts prepared by buyers for signature by suppliers and which were skewed in favor of the buyers.
In addition, the authority says since July 2021, it had secured the release of Shs 5 million in overdue payments to SMEs in the telecommunication and agro-processing industry.
