Beer distributors have been barred from setting the selling prices as the move is un-competitive and amounts to ‘price-fixing’. Competition Authority of Kenya (CAK) Director General Mr Wang’ombe Kariuki said the distributors cannot sit to discuss the pricing of the beverages they handle. “We cannot allow the distributors to sit and agree on a price,” Mr Wang’ombe said at the close of a three-day training workshop for journalists. Allowing businesses anywhere along the supply chain from manufacturers to retailers to determine the appropriate pricing is not allowed under competition laws as it tends to expose consumers through higher retail prices. It is specifically detrimental to consumers because any price increase along the distribution chain is reflected in the eventual pricing. CAK also reckons that no rational businesses would sit to agree on price reductions that could benefit the consumers, as each of them are looking for bigger profits. The agency can, however, not determine the retail prices in the different outlets ranging from kiosks to high-end hotels, because the consumers have the freedom of choice to ‘vote with their wallets and feet’. Wang’ombe statement offers a little reprieve to manufacturers, including the East African Breweries Limited whose distributors are demanding to set their profit margin and stock products from rival manufacturers. CAK, however, agrees with the distributors that they should be allowed to trade in rival manufacturers’ products citing that it was restrictive to limit how many products anyone could handle and stock. “It is progressive to allow the distributors to stock products from any manufacturers,” said the CAK boss, whose agency already fined a soft drinks manufacturer Sh2.5 million for restricting its distributors. Artificial inflation Coca Cola-owned Crown Beverages, which bottles popular water brands including Keringet, was found to have abused its market share by entering exclusive distribution agreements – which meant that its distributors were not allowed to stock and sell beverages from other manufacturers. Last week, EABL was locked in a battle with a some of its distributors who want to be allowed to increase their profit margin three-fold. Its distributors are currently earning about four per cent of the eventual retail price in a formula that is stipulated by the brewer.
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