New unit to fine, jail retailers for delaying suppliers’ cash

Traders display their Tomatoes at Daraja mbili open air market in Kisii County. [File: Standard]

Rogue retailers who withhold suppliers’ cash unduly now risk being slapped with fines of up to Sh10 million and lengthy jail terms.

This is after the Competition Authority of Kenya (CAK) formed a Buyer Power Department in a new push to address emerging concerns of contractual breaches by retailers.

“This prioritisation has been informed by the fact that the retail sector value chain has recently come under strain,” said CAK Director-General Wang’ombe Kariuki in a statement yesterday.

In December 2016, Kenya became the first country in Africa to adopt specific legislative provisions on buyer power through the competition law framework.

The retail sector has in recent years come under scrutiny for delayed payments to suppliers, which stood at Sh40 billion as at the end of December last year, with struggling retailers Nakumatt and Uchumi owing the bulk of the cash.

Justifiable reason

The new unit will now be allowed to investigate such cases, with the punishment for infringing the law being imprisonment for a term not exceeding five years, a maximum fine of Sh10 million or both.

Previously, CAK had no mandate to ask trade lobbies to provide details or even intervene in disputes between suppliers and buyers.

According to a statement from the authority, culprits will from now be subjected to penalties for delayed payments by a buyer without justifiable reasons in breach of contractual terms.

Unilateral termination (or threat of termination) of a commercial agreement without notice or a buyer’s refusal to receive or return goods without justifiable reasons and in breach of contractual terms will also land you in trouble. Others are buyers transferring costs or risks to suppliers.