Owners of supermarkets and other retail outlets that do not pay suppliers on time will face punitive sanctions, including serving time in jail, following the formation of a special unit to oversee the industry.
The competition regulator, CAK, said it had established a Buyer Power Department to address mounting concerns over the negative influence that businesses have had over suppliers.
The CAK said the unit’s key mandate will be to prevent a repeat of events that led to last year’s collapse of Nakumatt and Uchumi supermarkets with billions of shillings in supplier and creditor funds.
Multiple industry reports have indicated that the troubled retail chains used the huge market power they had over suppliers to withhold payments and charge fees for goods stocked in their premises, among other controversial practices.
The list of companies owed millions of shillings by Nakumatt, for instance, includes Brookside Dairy, New KCC, Kevian, Githunguri Dairy and Tropikal Brands Africa.
The CAK added that abuse of buyer power manifests itself in delayed payment without justifiable reasons in breach of contractual terms and unilateral termination of a commercial agreement without notice.
Refusal to receive or return goods without justifiable reasons, asking suppliers to fund the cost of a promotion and demanding that they limit products sold to competitors also constitute abuse.