The Competition Authority of Kenya (CAK) has fined Directline Assurance Company Limited KSh 85 million for abusing its bargaining power over small auto repair businesses.
- •The regulator said that Directline, a nationwide insurer with 24 branches, withheld payments from two Nairobi-based garages; Kilele Motors Limited and Midland Autocare Limited, after the firms carried out repairs on vehicles covered under its motor insurance policies.
- •The withheld sums, totaling more than KSh 6 million, placed the SMEs in “precarious financial positions,” according to CAK’s findings.
- •Abuse of buyer power arises when a dominant purchaser imposes terms that are unfair or disproportionate, undermining smaller suppliers.
“The penalties levied are commensurate with the gravity of the offence, as well as the conduct of the accused party during the investigation. Supply contracts between parties to a commercial relationships should be equitable and the product of candid engagements,” said David Kemei, CAK Director-General.
Directline cited temporary inaccessibility of its bank accounts, but the Authority concluded this did not excuse delayed payments and constituted an abuse of its superior position.
The ruling ordered Directline to pay the outstanding invoices, revise its supply contracts to include interest on late payments, and refrain from further conduct that violates the Competition Act. Each infraction carried a penalty of KSh 42.5 million.
