In Kenya, a special governmental unit has been set up to oversee the retail industry. Owners of supermarkets and other retail outlets that do not pay suppliers on time will face punitive sanctions, including serving time in jail. The competition regulator, CAK, said it had established a Buyer Power Department to address mounting concerns over the negative influence that businesses have had over suppliers.
The CAK said the unit’s key mandate will be to prevent a repeat of events that led to last year’s collapse of Nakumatt and Uchumi supermarkets with billions of shillings in supplier and creditor funds.
Multiple industry reports have indicated that the troubled retail chains used the huge market power they had over suppliers to withhold payments and charge fees for goods stocked in their premises, among other controversial practices.
In determining buyer power, the regulator will take into account the nature of contract terms, the payment requested for access to infrastructure and price paid to suppliers. The CAK said the unit will initially focus on the retail sector where there have been allegations and indications pointing towards abuse of buyer power.