Kenya’s RPM regime of exemptions to floor price-fixing regulations

The Kenya Ships Contractors Association (KSCA) recently became the latest in a long line of industry associations that have approached the Competition Authority of Kenya (CAK) for an exemption to set minimum prices.  Other recent applicants include the Law Society of Kenya (LSK); the Institute of Certified Public Accountants of Kenya (ICPAK), the Institute of Certified Public Secretaries of Kenya (ICPSK) and the Institute of Surveyors of Kenya.

Section 21 of the Kenyan Competition Act 12 of 2010 (the Act) prohibits firms or associations from entering into any agreement that “involves a practice of minimum resale price maintenance” (‘RPM’).

Under sections 25 and 26 (read jointly), however, firms or associations may apply to the CAK to be exempted from this prohibition by way of an application to the CAK in the prescribed form, especially in instances where they believe there are exceptional and compelling reasons (of public policy) justifying setting such resale price floors.

In evaluating requests for exemption, the CAK will consider whether the granting of an exemption will promote exports, bolster declining industries or, more generally, the potential benefits outweigh the cost of a less competitive environment due to the RPM conduct.

Kenyan competition lawyer Ruth Mosoti, with Primerio Ltd., notes that, “although each exemption will be considered on its own merits, the CAK’s recent decisions in applications of a similar nature seem to have created a precedent unfavourable to the KSCA’s request being approved.” In this regard, the CAK in the ICPAK application rejected the application and stated that the “[i]ntroduction of fee guidelines will decrease competition, increase costs, reduce innovation and efficiencies and limit choices to customers and is in fact likely to raise the cost of accountancy services beyond the reach of some consumers”.

The CAK’s Director General, Mr. Wang’ombe Kariuki has now issued a notice requesting input from the public regarding the application.