A Bill for an Act of Parliament to amend the Competition Act, and for connected purposes.
| CLAUSE | CONTENTS OF THE CLAUSE | OUR COMMENTS |
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| Clause 2 Amendment of section 2 of Cap. 504. | The alignment of the definition of "person" with Article 260 of the Constitution ensures consistency across statutory instruments, thereby eradicating any conflict with regard to the scope of “persons” subject to competition regulation. | The alignment of the definition of "person" with Article 260 of the Constitution ensures consistency across statutory instruments, thereby eradicating any conflict with regard to the scope of “persons” subject to competition regulation. |
| The proposed shift from "recognized" to "accredited" consumer body could enhance regulatory oversight by subjecting such entities to formal vetting by the Competition Authority as well as strengthen consumer representation. However, although requiring transparent and efficient accreditation criteria would avoid unnecessary exclusion of legitimate advocacy groups, this amendment may introduce bureaucratic hurdles. | The proposed shift from "recognized" to "accredited" consumer body could enhance regulatory oversight by subjecting such entities to formal vetting by the Competition Authority as well as strengthen consumer representation. However, although requiring transparent and efficient accreditation criteria would avoid unnecessary exclusion of legitimate advocacy groups, this amendment may introduce bureaucratic hurdles. |
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| (c) inserting the words “or a natural person” immediately after the words “trade association” in the definition of “undertaking” | This amendment clarifies that “natural persons” engaging in business for gain are subject to competition law. It is intended to close any interpretational gaps that previously exempted sole proprietors or freelancers from regulatory scrutiny. This is particularly relevant in digital commerce, where independent sellers operate outside traditional corporate structures. |
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| (d) inserting the following new definition in proper alphabetical sequence— | ||
| “digital activities” means the provision of a service by means of the internet, or provision of digital content, for the benefit of business consumers or other consumers (whether paid for or otherwise and whether or not such activity is multisided), and may include — (a) online intermediation services, including online marketplaces and app stores; (b) online search engines; (c) online social networking services; (d) video-sharing platform services; (e) independent interpersonal communication services; (f) operating systems; (g) cloud computing services; and (h) online advertising services. | The detailed categorisation of digital activities provides clarity in regulating online platforms, marketplaces, search engines, and cloud services. This is a proactive step toward addressing challenges posed by digital markets, ensuring fair competition, and mitigating anti-competitive behaviour by dominant technology firms. |
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| “product information standards” means Standards developed by any government agency in Kenya for the purpose of consumer benefit, relating to information, safety and health; | The inclusion of "product information standards" underscores the role of regulatory authorities in ensuring consumer safety and transparency. By defining such standards as those developed by government agencies, the amendment strengthens the legal basis for enforcing accurate product information disclosures, reducing deceptive marketing practices, and protecting consumer rights. |
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| “strategic market position” has the meaning assigned in Section 4(2)(c) | The introduction of "strategic market position" recognises that certain undertakings, despite not holding a dominant market share, may still wield significant competitive influence due to their role as essential intermediaries, access to critical data, or their ability to shape market conditions. This definition enables regulatory intervention in cases where firms use strategic positioning to undermine competition or restrict market access for emerging players. |
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| “superior bargaining position” means the ability of an undertaking to control, direct, define or determine the conditions of business operations with counterparties which are favourable to itself without reference to the undertaking’s dominant market position or market power in the relevant market; | By distinguishing between market dominance and superior bargaining power, this amendment allows scrutiny of firms that, while not dominant, exert disproportionate influence over suppliers or customers. This aligns with global trends in competition law, recognising power imbalances that arise outside traditional monopoly structures. |
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| Clause 3 Amendment of section 4 of Cap. 504. | Section 4 of the principal Act is amended in subsection (2) by adding the following new paragraphs immediately after paragraph (b) — (c) in the context of digital activities, where dominance can be established even with market shares below forty percent, the Authority shall consider factors that typically grant significant market position, whether they arise from the digital activity being performed in one or multiple markets; (d) direct and indirect network effects and the entry barriers arising in connection with those network effects; (e) economies of scale and scope enjoyed by the undertaking, including with regard to the undertaking's access to data relevant for competition; (f) switching costs for users and the ability and propensity for users to multihome; and (g) competitive pressure driven by innovation; (h) the importance of the intermediary services provided by the undertaking for accessing supply and sales market, including with reference to the size of the undertaking and the number of business and individual users it has and the period over which that level of importance has been held. | The inclusion of digital-specific criteria for determining dominance represents a significant regulatory shift. By considering factors such as network effects, economies of scale, switching costs, and data access, the amendment aligns Kenya’s competition framework with the European Union’s Digital Markets Act. This, therefore, ensures that firms leveraging digital advantages to entrench their market position are appropriately regulated, even when their market share is below the conventional forty percent (40%) threshold. |
| Clause 4 Amendment of section 9 of Cap. 504. | This amendment expands the Competition Authority’s functions, enhancing its role in policy formulation, inter-agency coordination, and regulatory oversight. By requiring the Authority to recommend competition policies to the Cabinet Secretary and collaborate with other government agencies, the provision strengthens market regulation and consumer protection. The increased mandate enables a more cohesive approach to competition enforcement, preventing regulatory gaps and fostering pro-competition reforms. It also aligns Kenya’s framework with global best practices, where competition regulators actively shape policy and engage with other regulatory bodies. However, the expansion of duties may overstretch the Authority’s resources, particularly if coordination mechanisms are not clearly defined. Effective implementation will require structured collaboration frameworks and sufficient funding to ensure that the Authority can fulfil its broadened mandate without compromising its core enforcement functions.14:23 | This amendment expands the Competition Authority’s functions, enhancing its role in policy formulation, inter-agency coordination, and regulatory oversight. By requiring the Authority to recommend competition policies to the Cabinet Secretary and collaborate with other government agencies, the provision strengthens market regulation and consumer protection. The increased mandate enables a more cohesive approach to competition enforcement, preventing regulatory gaps and fostering pro-competition reforms. It also aligns Kenya’s framework with global best practices, where competition regulators actively shape policy and engage with other regulatory bodies. However, the expansion of duties may overstretch the Authority’s resources, particularly if coordination mechanisms are not clearly defined. Effective implementation will require structured collaboration frameworks and sufficient funding to ensure that the Authority can fulfil its broadened mandate without compromising its core enforcement functions.14:23 |
| Clause 5 Amendment of section 18 of Cap. 504. | Section 18 of the principal Act is amended in subsection (4), by deleting the words “abuse of buyer power” and replacing therefore the words “abuse of superior bargaining position” — | Replacing "abuse of buyer power" with "abuse of superior bargaining position" broadens regulatory reach beyond buyer-supplier relationships. This amendment targets unfair practices by any entity that exerts undue influence over its counterparts, including dominant suppliers and digital platforms. The amendment further strengthens protections against exploitative contractual terms and unfair commercial practices, ensuring a more balanced market environment. |
| Clause 6 Amendment of section 23 of Cap. 504. | Section 23 of the principal Act is amended— (a) in subsection (1), by inserting the word “intermediates” immediately after the word “supplies” appearing in paragraph (a); | Recognising market intermediaries such as, digital platforms connecting buyers and sellers, as potential holders of market power reflects the evolving nature of commerce. This ensures that platforms facilitating transactions, without directly supplying goods, are subject to regulatory scrutiny. |
| (b) in subsection (2), by deleting the words “though not dominant” appearing in paragraph (a); | This change clarifies that firms controlling substantial market shares (even below fifty percent [50%]) must justify their lack of dominance rather than assuming exemption. This would strengthen regulatory oversight, particularly in industries with high barriers to entry. |
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(c) in subsection (2), by inserting the words “especially in the case of digital activities as per section 4 (2) (c)” immediately after the words “but has market power” appearing in paragraph (b). | Reinforcing that digital firms can be dominant even with lower market shares aligns with global competition trends and would ensure effective regulation of technology-driven markets. | |
| Clause 7 Amendment of section 24A of Cap. 504. | The Principal Act is amended by deleting section 24A. | The repeal of Section 24A removes explicit protections against the abuse of buyer power, replacing it with the broader concept of "abuse of superior bargaining position" introduced in Clause 9. This shift expands regulatory oversight beyond buyer-supplier relationships to cover any undertaking that exerts disproportionate influence over its counterparts. The absence of a specific buyer power provision may, however, weaken protections for suppliers, particularly in industries dominated by a few powerful buyers. Moreover, enforcement will depend on how effectively the Competition Authority defines and applies the concept of superior bargaining position. To mitigate these concerns, the Authority should issue clear guidelines distinguishing superior bargaining position from legitimate commercial negotiations. This will ensure that businesses can operate with certainty while still preventing market abuses. |
| Clause 8 Amendment of section 31 of Cap. 504 | Section 31 of the principal Act is amended in subsection (1) by adding the following new paragraph immediately after paragraph (c) — (d) prohibitions relating to abuse of superior bargaining position. | Extending the Authority’s powers to investigate superior bargaining position abuses provides a robust enforcement mechanism. This would ensure that unfair commercial practices; those that are beyond traditional monopolistic behaviour, are addressed. |
| Clause 9 New | The principal Act is amended by inserting the following new Part immediately after section 40— PART III A — SUPERIOR BARGAINING POSITION 40A. (1) A conduct that amounts to abuse of superior bargaining position in a market in Kenya, or a substantial part of Kenya, is prohibited. (2) The Authority may where it establishes that a sector or an undertaking is experiencing or is likely to experience incidences of abuse of superior bargaining position, monitor the activities of the sector or undertaking and ensure compliance by imposing reporting and prudential requirements. (3) Where the Authority determines that a sector or an undertaking is experiencing or is likely to experience incidences of abuse of superior bargaining position, the Authority may— (a) monitor the activities of the sector or undertaking; (b) impose reporting and prudential requirements and regulations to ensure compliance; and (c) develop a code of practice. (4) The Authority shall publish the code of practice in subsection 3(c) which shall be developed in consultation with the relevant stakeholders. (5) In determining the presence or absence of superior bargaining position, the Authority shall consider— (a) the degree of dependence by the affected undertaking or undertakings on transactions with the party under investigation; (b) the position of the undertaking in the market; (c) the possibility of the affected undertaking to change its business counterpart; (d) whether the party under investigation is an unavoidable trading partner or a critical business partner in the relevant market. (6) The Authority will make this determination with reference to, among others, any existing agreement between the counterparties and any other factor that shows the affected undertaking needs to carry out transactions with the undertaking under investigation. (7) For purposes of subsection (1), a conduct that amounts to superior bargaining position includes— (a) delays in payment of suppliers without justifiable reason in breach of agreed terms of payment; (b) unilateral termination or threats of termination of a commercial relationship without notice or on an unreasonably short notice period, and without a justifiable reason; (c) failing to provide the counterparty with terms, conditions or other rules associated with the transaction or service prior to the transaction or provision of the service; (d) unilateral variation of contractual terms, conditions, or other rules associated with the transaction or service without prior notification to the counterparties; (e) transfer of costs to a counterparty; (f) transfer of commercial risks meant to be borne by a party to the counterparty; (g) demands for preferential terms unfavourable to the counterparty; (h) imposing purchase prices below competitive levels or service fees above competitive levels; (i) unreasonable collection and/or processing of data of the counterparty; (j) imposing unduly difficult conditions for the termination of service; and (k) obstruction of business activities or interference in the counterpart’s management of its business. (8) In investigating an abuse of superior bargaining position complaint, the Authority shall be guided by any existing agreement, whether written or not, between the counter parties. (9) A person who contravenes the provisions of subsection (1) commits an offence and shall on conviction be liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten million shillings or to both. | The inclusion of Part IIIA introduces a structured framework for identifying and regulating the abuse of superior bargaining position. By explicitly defining abusive conduct—such as unfair pricing, contract termination without notice, or unilateral contractual modifications—the amendment enhances legal certainty and enforcement clarity. The requirement for the Competition Authority to monitor affected sectors and impose reporting requirements ensures proactive oversight. Additionally, the inclusion of financial penalties and potential criminal liability serves as a strong deterrent against exploitative business practices. Overall, this provision significantly strengthens competition law enforcement in Kenya by addressing power imbalances that were previously unregulated |
| Clause 10 Amendment of section 41 of Cap. 504 | Section 41 of the principal Act is amended in paragraph (h) by inserting the word “privatization” immediately after the word “takeover”. | The introduction of “privatization” within the definition of mergers would ensure that the Competition Authority has oversight over privatisation transactions that could impact market competition. From a regulatory perspective, the amendment would ensure that privatisation processes adhere to fair competition principles, thereby fostering a level playing field. Further, the Authority would be able to scrutinise mergers that arise from privatisation thereby mitigating risks of monopolistic control and promoting broader market access. This aligns with global best practices, as many jurisdictions require competition assessments of privatisation to prevent undue market power accumulation by private acquirers. The additional regulatory scrutiny may however, lead to bureaucratic delays in privatisation processes, increasing the cost and complexity of such transactions. The scope of the Authority’s intervention must be clearly defined to avoid regulatory overreach, which could discourage private sector participation in strategic industries. |
| Clause 11 Amendment of section 43 of Cap. 504 | The principal Act is amended in section 43 by inserting the following new subsection immediately after subsection (2) — (3) The Authority may, within fourteen days from the date of receipt of a notification of a proposed merger, invite the public to give information on the proposed merger. | This amendment empowers the Competition Authority to invite public input within fourteen days of a merger notification, enhancing transparency and accountability. |
| Clause 12 Amendment of section 55 of Cap. 504 | Section 55 of the principal Act is amended— (a) in paragraph (a), by inserting the following new subparagraph immediately after subparagraph (vi) — (vii) the goods or services are in such other manner other than the manner specified. (b) in paragraph (b), by inserting the following new subparagraph immediately after subparagraph (v) — (vi) concerning any other information to the consumer. (c) inserting the following new paragraph immediately after paragraph (b) (c) withholding material information on the quality and use of a product. | This amendment broadens consumer protection by prohibiting the withholding of material information about product quality and use. It ensures consumers receive accurate and reliable information, aligning with international best practices in preventing deceptive trade practices. The provision empowers the Competition Authority to take enforcement action against non-compliant businesses, fostering market transparency and consumer trust, particularly in sensitive sectors such as pharmaceuticals, food, and financial services. However, it may impose additional compliance burdens on entities and lead to excessive litigation if misused. To balance these interests, the Authority should provide clear guidelines on what constitutes "material information" to prevent regulatory uncertainty. |
| Clause 13 Amendment of section 69 of Cap. 504 | Section 69 of the principal Act is amended in subsection (1) by deleting the word “Recognized” and substituting therefor the word “accredited” | Replacing "recognized" with "accredited" introduces a formal vetting process for consumer bodies, ensuring only qualified organisations represent consumer interests. While this strengthens regulatory oversight and credibility, it may also create barriers for grassroots organisations with limited administrative capacity. To maintain inclusivity, the Authority should ensure that accreditation remains transparent, accessible, and proportionate to the capabilities of different advocacy groups. |
| Clause 14 Amendment of section 70A of Cap. 504 | Section 70A of the principal Act is amended— (a) in subsection (1), by deleting the word “complaint” and substituting therefor the word “consumer welfare issues” (b) in sub section (2), by deleting the word “complaints” and substituting therefore the word “consumer welfare issues”. | Replacing "complaints" with "consumer welfare issues" expands the Authority’s mandate, allowing proactive investigations into consumer protection concerns even without formal complaints. This shift aligns with modern regulatory trends by enabling early detection of systemic market abuses and safeguarding consumer interests beyond individual grievances. It may, however, strain the Authority’s resources if investigations increase without clear prioritisation. There is also a risk of regulatory overreach, subjecting businesses to unnecessary scrutiny. To maintain efficiency and fairness, the Authority should establish clear criteria for initiating investigations, ensuring interventions are targeted and proportionate. |
| Clause 15 Amendment of section 89 of Cap. 504 | Section 89 of the principal Act is amended by— (a) renumbering the existing provision as subsection (1); (b) by adding the following new section (2) Any person who contravenes or fails to comply with a lawful order of the Authority given in terms of this Act will be liable to a financial penalty of up to ten percent of the immediately preceding year's gross annual turnover in Kenya of the undertaking or undertakings in question. | This amendment imposes financial penalties of up to 10% of an undertaking’s gross annual turnover for non-compliance with the Competition Authority’s lawful orders. By introducing a financial deterrent, the provision reinforces regulatory effectiveness and discourages deliberate violations of competition laws. While this ensures compliance, the severity of the penalty raises concerns about proportionality, particularly for SMEs that may struggle to absorb such financial sanctions. Additionally, without clear enforcement guidelines, inconsistent application could lead to legal uncertainty and protracted litigation. To address these concerns, the Authority should adopt a structured approach to penalties, ensuring they are proportionate to the nature and impact of the violation. |
| Clause 16 Amendment of section 92 of Cap. 504 | The principal Act is amended by repealing Section 92 and replacing therefor the following section— 92. (1) The Authority may issue a penalty notice to an undertaking to enforce an order of the Authority against the undertaking. (2) If the specified date in a penalty notice has passed and — (a) the period during which an appeal against the imposition, or amount, of the penalty may be made has expired without an appeal having been made, or (b) such an appeal has been made and determined, the Authority may make an ex-parte application to the Tribunal for an order to recover from a person, any amount payable under the penalty notice which remains outstanding. (3) The Authority may enforce an order by— (a) attachment and sale, or by sale without attachment, of any property; (b) attachment of debts; (c) appointing a receiver; or (d) in such other manner as the nature of the relief granted may require: | This amendment enhances the Authority’s enforcement powers by allowing it to issue penalty notices and recover fines through measures such as asset attachment, debt recovery, and receivership. These mechanisms align with international best practices, ensuring compliance and deterring anti-competitive conduct. However, broad enforcement powers, particularly ex-parte actions, may disproportionately affect entities and raise due process concerns. To balance efficiency with fairness, the Authority should establish clear enforcement criteria and ensure accessible appeal mechanisms to prevent arbitrary penalties. |