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Regulator cracks whip on Del Monte and Basco Paints

By Dominic Omondi | January 25th 2020
Basco Paints Sales Manager T. Ramesh and Managing Director Kamlesh Shah during the launch of the Duracoat Fragrant Range of Paints at Serena Hotel. (James Wanzala, Standard)

The Competition Authority of Kenya has cracked the whip on food processing company Del Monte and paint manufacturer Basco Paints for engaging in anti-competitive behaviour.

The two companies have accepted liabilities, with the Del Monte paying Sh776,025 for misleading consumers while Basco Paints was slapped with a Sh20.8 million fine for price fixing.

Del Monte Kenya was found to have falsified the composition of its juices, with what was printed on the packaging material differing from the content of the product.

CAK found the Thika-based soft drink manufacturer to be in contravention of a section of the Competition law which frowns against falsely representing good. Such a misrepresentation might be on standard, quality, value, grade, composition, style or model.

The watchdog in a Gazette Notice published yesterday noted that after initiating investigations against the company, it had since entered into an agreement with Del Monte after the latter was found to have contravened Section 55 (a) (i) of the Act.

“The Authority has imposed a financial penalty to the tune of Kenya Shilling seven hundred and seventy six thousand, and twenty-five (Sh776,025) on the company,” said CAK’s Director General Wang’ombe Kariuki.

As a result, Mr Wang’ombe noted that the company gave a written undertaking through a settlement agreement that they wish to resolve the matter amicably with the authority.

According to sources, Del Monte, which mostly produces canned pineapple, had been deceiving consumers that its juices were produced wholly from fruits.

CAK slapped Basco Paints, makers of Duracoat, with Sh20.8 million fine for engaging in cartel-like behaviour.

This is after CAK initiated investigations of an alleged collusive conduct between certain manufacturers and distributors of paint products in the country.

Weekend Business understands that other major paint manufacturers including Crown Paints, Galaxy and Plascon Kenya Limited are also under the authority’s radar, as the government moves to break up cartels that fleece consumers by dimming competition, thus charging them exorbitant prices.

Basco, just like Del Monte, accepted liability opting to pay the statutory fine. The investigations are reported to have lasted for slightly over a year.

“The company gave a written undertaking to desist from any anticompetitive conduct and put in place a competition compliance program to sensitise its leadership and key staff on competition law,” said Wang’ombe.

With the construction industry beginning to get its mojo back- particularly with President Uhuru Kenyatta’s affordable housing project- restrictive trade practices where traders fix prices or segregate markets or collude when tendering, could see traders rake in billions at the expense of buyers.

Other trade restrictive practices include a practice of minimum resale price maintenance where a distributor agrees not to sell the product for less than a set minimum price.

CAK has also flagged ad companies for signing several agreements on pitching costs, which amounted to collusion. The CA in 2017 investigated more than 20 companies suspected of price-fixing.

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