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CAK cautions industry bodies on price fixing

BUSINESS
By Frankline Sunday | October 6th 2021

Competition Authority of Kenya (CAK) has warned professional bodies seeking to set minimum rates for their services that they risk fines or criminal prosecution. In a legal advisory released yesterday, the regulator said bodies such as the Institute of Certified Public Accountants and the Engineers Board of Kenya (EBK) could be engaging in a form of price fixing by setting minimum service rates.

“It has come to the attention of the Competition Authority of Kenya of a renewed momentum by various professional associations seeking to set minimum chargeable prices or fees for their members without observing the requisite provisions of the Competition Act,” said the market watchdog.

According to CAK, Section 21 of the Act prohibits entities from setting up agreements that could prevent, distort or lessen competition unless they obtain an exemption from the regulator.

The Act also outlaws practices that directly or indirectly fix purchase or sale prices, or any other trading conditions in relation to goods and services as well as minimum resale price maintenance.

CAK Director General Wang’ombe Kariuki said professional bodies that seek to establish minimum costs should seek an exemption in writing, provided this is taken through a public participation exercise.

“It is important to note that the envisaged arrangements of setting minimum rates or fees are only meant to extinguish competition among members of the professional associations to the detriment of clients,” he said. 

CAK further said infringing on the Competition Act, 2012 could attract a penalty of up to 10 per cent of an entity’s preceding year’s gross annual turnover and, or, criminal prosecution liable to a fine of Sh10 million and up to five years imprisonment.

Last month, the National Treasury invited public comments on a raft of regulations including the Draft Accountants (Remuneration) Order, 2021 that seeks to set minimum fees accountants can charge clients who engage their services.

EBK similarly called for public participation for the proposed Engineers (Scale of Fees for Professional Engineering Services) Rules, 2021.

It said the rules would provide a framework for determining minimum fees chargeable by professional engineers and prevent undercutting among practitioners.

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