Competition agency to probe existence of cartels in coffee industry


Kenya: The Competition Authority of Kenya (CAK) will launch investigations into claims of powerful cartels in the coffee business in the country.

The agency plans to probe abuse of dominance by coffee firms particularly when it comes to marketing.

Director General Wang’ombe Kariuki confirmed that the inquiry would start in the 2014/15 financial year with a view to enhancing competition and thus enable farmers to reap more benefits in terms high earnings.

“In the next financial year, part of our commitment is to investigate use of immoral trade tactics that leads to huge suffering among the bulk of coffee farmers and which frustrate investors in the sub-sector,” said Mr Kariuki.

For long, subsidiaries of multinational coffee marketing firms have been accused of price distortion at the Nairobi Coffee Exchange (NCE), marketing segmenting, and coffee smuggling, among other underhand practices. 

Top companies in the coffee business in the country, which are all foreign, enjoy a sizeable control of the value chain, mainly milling, marketing and roasting.   Further, the coffee organisations have been blamed for abusing their dominance in the market and frustrating new entrants thus suppressing competition. 

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Coffee regions

At a business journalists’ training workshop held in a Naivasha hotel last week, Kariuki confirmed that the move to investigate cartel has been prompted by claims of existence of cartels by farmers and governors from coffee-growing regions.

Governors have been fighting to control the milling and marketing of the crop in a move they say will put more money in farmers’ pockets.

The new system was started by Nyeri Governor Nderitu Gachagua, who was later joined by William Kabogo of Kiambu, Mwangi wa Iria of Murang’a, Joseph Ndathi of Kirinyaga and Peter Munya of Meru. 

The move by Gachagua has not gone down well with managers of subsidiaries of foreign coffee firms, with the latter accusing the governors of introducing trade restrictions, which are contrary to the World Trade Organisation (WTO) regulations.

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Competition Authority of Kenya CAK cartels coffee