COMPETITION AUTHORITY OF KENYA
Consolidated Guidelines
on the Substantive Assessment of Restrictive Trade Practices under the Competition
Act
This publication is not a legal document. It contains general information intended for
the convenient use and guide on how the provisions under Part III of the Competition
Act, No 12 of 2010 are applied. This publication can be made available in alternative
formats upon request. Please contact the Competition Authority of Kenya using the
contact information provided below. This publication may not be reproduced, in part or
in whole by any means without the expressed permission of the Competition Authority
of Kenya.
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Foreword by the Director General
The Competition Authority of Kenya (“the Authority”) is established under Section 7 of
the Competition Act and is charged with, inter alia, promoting and enforcing
compliance with the Competition Act. One of the objectives of the Competition Act is to
bring national competition law, policy and practice in line with international best
practice and in furtherance of that objective and in accordance with the powers
conferred on the Authority under Section 93 of the Competition Act, the Authority
hereby publishes these consolidated guidelines on the substantive assessment of
restrictive trade practices which is intended to:

Equip undertakings and their legal representatives with information on how the
Authority carries out its legal and economic analysis with the respect to
restrictive trade practices and in particular provide explanations of the
assessment or review standard the Authority will use in the assessment of (i)
horizontal agreements, (ii) vertical agreements and (iii) abuse of dominance;

Explain the analytical construct that the Authority
whether an undertaking is dominant;

Identify categories of restrictive trade practices that may be subject to
exemptions.
may use in determining
This guidance document is not intended to be a substitute for the provisions on
restrictive trade practices under Part III of the Competition Act or any subsidiary rules
made pursuant thereto. These guidelines should be read together with the Competition
Act and any subsidiary rules made pursuant thereto and with any other applicable legal
instruments of Kenya including binding or persuasive legal precedent from competition
law cases. These guidelines do not constitute legal advice and do not have the force of
law and is not binding on the Competition Tribunal or any court of law.
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Table of Contents
Section 1 - Introduction ............................................................................................................... 5
Section 2 - The Ambit of the Authority’s Jurisdiction with respect to Undertakings
engaged in Trade.......................................................................................................................... 7
Section 3 - The Assessment or Review Standard used in Assessing Anticompetitive
Agreements ................................................................................................................................... 8
Section 4 - The Analytical Framework used in Abuse of Dominance Cases ..................... 24
Section 5 - Categories of Exempted Conduct under the Act ............................................... 33
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Section 1 - Introduction
1. The primary law provisions on restrictive trade practices are set out under Part III of the
Competition Act (“the Act”). These guidelines provide explanation on the provisions
under Part III of the Act.
2. These guidelines also provide direction and clarity regarding the analytical framework
and the factual evidence the Authority considers in cases involving anticompetitive
agreements including horizontal and vertical agreements as prohibited, respectively,
under Section 21 and 22 of the Act.
3. These guidelines also explain the assessment framework the Authority uses in assessing
whether an undertaking is dominant and the type of evidence it may consider when
establishing an abuse of dominance case.
4. No single methodology will be applied in all cases. Rather, the Authority will undertake
a fact-finding process in each restrictive trade practice case and apply a range of tools to
evaluate the conduct and/or agreement in question.
5. The principles contained herein will be applied and further developed and refined by
the Authority in individual cases. The Authority may revise these guidelines from time
to time in the light of new developments to reflect changes in best practice and of
evolving Kenya case law.
6. In this document the Authority explains the following:
In Section 2 - The Ambit of the Authority’s Jurisdiction with Respect to Undertakings
Engaged in Trade: this section explains the category of undertakings that are regulated
by Part III of the Act.
In Section 3 - The Assessment or Review Standard used in Assessing Anticompetitive
Agreements: this section explains the assessment criteria that will be applicable to
horizontal and vertical agreements.
In Section 4 - The Analytical Framework used in Abuse of Dominance Cases: this
section explains: (i) when market power will be assessed together with market share to
determine whether an undertaking is dominant at law; (ii) the concept of abuse; and,
(iii) how exclusionary and exploitative abuses will be assessed under the Act.
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In Section 5 - Categories of Exempted Conduct under the Act: this section explains five
categories of exemptions corresponding to exemptions of:
i.
Conduct of undertakings that can contribute to maintaining or promotion
of exports;
ii.
conduct that contributes to the improving or preventing decline of the
production or distribution of goods or the provision of services, or the
promotion of technical or economic progress;
iii.
conduct that has a net benefit to the public, which outweighs or would
outweigh the lessening of competition that results or would likely result
from the conduct;
iv.
certain intellectual property arrangements; and
v. Certain professional or trade association agreements.
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Section 2 - The Ambit of the Authority’s Jurisdiction with Respect to Undertakings
Engaged in Trade
7. The Authority considers that it can exercise its jurisdiction over undertakings and
conduct for which it has been given enforcement power under the Act. In the context of
these guidelines, this means that the Authority considers that as a legally constituted
body it has the power to investigate, assess conduct and to seek to implement remedies
to address conduct undertaken by a party/legal person intended to be regulated by the
Part III of the Act. The Authority considers that the legal persons over whom it has
jurisdiction are undertakings engaged in economic activity.
8. As regards assessing the effect of conduct proscribed under Part III of the Act, the
Authority will look at the effect of the conduct on the market in Kenya or any part of
Kenya. In this regard it should be noted that in these guidelines when the Authority
assesses conduct under Sections 21 and 22 of the Act, it looks at whether the conduct is
anticompetitive and this term is used interchangeably with conduct “which have as their
object or effect the prevention, distortion or lessening of competition in trade in any goods or
services in Kenya, or a part of Kenya”.
9. In determining whether it should exercise its jurisdiction in respect of certain vertical
agreements, the Authority may consider whether the agreement is significant enough to
prevent, distort or lessen competition on the market in Kenya. The Authority considers
that an agreement should have more than a minor or trivial impact on the identified
relevant market. One proxy that the Authority may use in determining whether an
agreement is significant is the combined market share of the undertakings acting in
collaboration.
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Section 3 - The Assessment or Review Standard used in Assessing Anticompetitive
Agreements
10. Section 21(1) of the Act prohibits all agreements between undertakings, and concerted
practices of undertakings or decisions of associations of undertakings which have the
object or effect of preventing, distorting or lessening competition. The Authority
considers that agreements between competitors at the same level of production and
agreements among market players at different levels of production, i.e., horizontal and
vertical agreements, to the extent that they distort or restrict competition, are prohibited
at law.
11. Section 21(3) of the Act sets out a non-exhaustive list of examples of agreements that
may constitute an anticompetitive agreement. Section 22 of the Act sets out prohibitions
of certain agreements among trade associations.
12. Certain exemptions are carved out under the Act for certain agreements that, though
restrictive or bear some risk of distortion of competition, have certain redeeming
qualities. These are:



Certain vertical or horizontal agreements may be exempted if they satisfy
the criteria under Section 26(3) of the Act;
Certain intellectual property agreements may be exempted under Section
28(1) of the Act.
Decisions of professional associations, including agreements, formed in
the context of the professional association and which fit within the
meaning of Section 29(2) may also be exempted.
13. Where an undertaking thinks its agreement is of the latter kind it can, pursuant to
Section 25, Section 28(1) and/or, Section 29(1) apply to the Authority for an exemption
from the Act. The Authority will determine whether the agreement satisfies the
conditions set out for the granting of an exemption under the applicable section of the
Act.
14. All other agreements not subject of an exemption and which prevent, distort or lessen
competition are subject to enforcement proceedings.
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ASSESSING AGREEMENTS IN GENERAL
15. The Authority considers that while many different terms may be used to describe an
agreement (combined action, decisions of associations, arrangement, deal, concerted
action or concerted practices, concurrent action, contract, etc.), the terms will be treated
as interchangeable when the Authority conducts its assessment.
16. While there may be factual differences in the way various arrangements manifest
themselves, the Authority also considers that if any type of agreement is evidenced by
the facts, irrespective of the name or level of informality or formality, that combined
action triggers the statutory provisions governing agreements under the Act.
CONCERTED PRACTICE AND DECISIONS BY ASSOCIATIONS
17. Section 21(1) of the Act states that “decisions by associations of undertakings, decisions
by undertakings or concerted practices by undertakings which have as their object or
effect the prevention, distortion or lessening of competition” are prohibited unless they
are exempt. The Authority considers that:

“concerted practice” can include any type of coordinated activity between
undertakings which substitute practical co-operation between them for
the risks presented by effective competition, and includes any practice
which involves direct or indirect contact or communication between
undertakings, the object or effect of which is either to influence the
conduct of undertakings on a market or to disclose the course of conduct
which an undertaking has decided to adopt or is contemplating to adopt
in circumstances where the disclosure would not have been made under
normal conditions of competition.
18. The Authority considers that “decisions of associations” can include any form of
cooperation or arrangement among competing undertakings in the setting of an
industry association or private sector organisation or any industry association setting.
DISCUSSED IN PARAGRAPH 34 -37
19. With respect to the range of conduct that can constitute an agreement within the
meaning of Section 21(1) of the Act, the Authority considers that a group of
undertakings who are competitors have engaged in prohibited conduct where they
agree, whether through formal expression, conduct or by silent consensus, to give effect
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to a common scheme which has an anticompetitive object or effect in respect of the
trade in goods or services in Kenya.
20. Therefore, the agreements as described under Sections 21(1) and 21(2) of the Act and
given example under Section 21(3) may be:



written down in a formal contract that memorialises the terms of the
agreement among parties;
via an oral agreement; or
Any document that memorialises the collective object of the collaborating
parties.
The Authority considers that an agreement can be manifested in records or in a series of
phone calls, contacts or it can be a policy of doing business among the undertakings.
Any drafted/written document is viewed by the Authority as only the presumptive
terms of the agreement and when assessing the restrictive trade practice the Authority
will look at the language and also the meaning that the agreement has been given by
the undertakings.
21. The Authority will not only look at any formal written document that exists but also the
way the undertakings have interpreted the terms of the agreement through a series of
actions. In a case before it, the Authority may consider the hierarchy of factors, ranging
from a formal sales agreement or the terms written into the fine print of a pro forma
invoice to silent consensus and any additional “plus factors” as evidenced by the
surrounding circumstances when deciding whether an agreement has been reached
between undertakings.
22. The Authority considers that there must be a plurality of actors for there to be an
agreement. Therefore, where two or more parties to an agreement may be treated as a
single economic entity, the prohibition under Section 21(1) does not apply. In this
context, the Authority will apply a legal test which is one premised on the notion of
control. The legal test of control is the same test applied in the context of the assessment
of a merger.1
23. Section 21(2) expressly extends the prohibition on restrictive agreements to horizontal
and vertical agreements. There is a distinction to be drawn between horizontal
agreements and vertical agreements and that the consequence of that distinction is that
1
See for example the definition of control in the Guidelines on the Substantive Assessment of Mergers
available at www.cak.ke.
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the Authority will apply separate assessment criteria for horizontal agreements and
vertical agreements.
24. When the Authority reviews horizontal and vertical agreements under Section 21(1) or
22(1) of the Act, it will seek to establish whether:
When the Authority reviews horizontal and vertical agreements under section 21 (1) of
the Act, it will seek to establish whether:
i.
There is an agreement in fact.
ii.
There is a plurality of actors.
iii.
The agreement has the object or effect of preventing, restricting/lessening or
distorting competition on the market
Rationale: under section 22 (1) vertical or horizontal agreements do not arise
HORIZONTAL AGREEMENTS
25. A horizontal agreement is an agreement between undertakings which operate at the
same level in the production or distribution chain.
26. Horizontal agreements to fix prices, to divide-up markets via customer allocation or
allocation of geographic regions are examples of collusive agreements that are
prohibited by the Act.
27. The Authority considers that horizontal collusive agreements (i.e., among competitors)
can have no redeeming value whatsoever. These agreements include price-fixing
cartels, bid-rigging, and market division agreements. Examples of other potential
horizontal agreements include information sharing and trade association agreements.
Information Sharing
28. Competitors may engage in information sharing if the information shared is non-price
information such as collaborations on technical, safety and education standards for the
industry. In that regard the information shared must be directed at improving
competition in the market as a whole. Information exchanged among undertakings for
the purpose of fulfilling industry certification requirements may not likely fall afoul of
the Act. The undertakings cannot use this forum to agree terms on prohibited anticompetitive conduct.
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29. However, sharing of price information would fall within the conduct deemed to
prevent, restrict or distort competition in the market.
30. Exchange of information for the purpose of allocating customers or markets to specific
undertakings, for example, the exchange of labour and research costs, specification on
services, or the exchange of any confidential business secrets, could be construed as an
agreement among undertakings to eliminate competition among themselves.
31. Frequent exchange of confidential information among all competitors in a market where
there are few competitors (i.e., concentrated markets) is more likely to have a significant
effect on competition. In addition, the exchange of information between competitors
that is not provided to consumers is also likely to have a significant adverse effect on
competition. Information sharing can reduce the uncertainty that competitors will face
and therefore harms competition on the market.
32. Any exchange of information, whether horizontal or vertical, that relates to price-fixing,
bid-rigging, market or customer allocation/sharing between undertakings in a
horizontal relationship will be subject to strong punitive/enforcement action available to
the Authority.
33. The question of whether non-price information-sharing significantly harms competition
on the market will be assessed by the Authority on a case by case basis.
Professional Associations and Trade Associations
34. The Authority also considers that there is no substantive distinction to be made in law
between agreements among associations of undertakings, agreements reached by the
members of a trade association or professional association. As such the Authority will
review these agreements using the same tools and assessment standards used for
reviewing horizontal agreements.
35. The Authority considers that an agreement among members of an association is
analysed no differently from an agreement among association of undertakings. This is
because both these types of agreements have the same economic effect on the market.
Once the members of the association have given their assent orally or in a written
formal document or by their actions over time, the Authority will most likely impute
the actions of the trade association as a whole to the members themselves.
36. The Authority considers that the collaboration among the members/competitors within
an association, whether it is to set rules for an industry or to develop a standard, is
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effectively an agreement satisfying Section 21(1) and Section 22(1) of the Act. Where the
collaboration among the competitors restricts/lessens, prevents or distorts competition
in any part of the market in Kenya, they will be found to be in contravention of the Act.
The Authority considers that the defining feature of such a contravention is whether or
not the members of the association acted in concert or in agreement.
37. Members of a trade association are jointly liable for the decisions of the association. The
Authority may consider evidence that an undertaking disassociated itself from a
decision taken by the association. The onus will be on the undertaking to provide
written evidence and/or testimonies to support its claim. Hence, mere membership in a
trade association will not suffice to find a plurality of actors, unless evidence to the
contrary is demonstrated by a member, the decisions or recommendations of the
association are attributed to all the constituent members of the association. In this
context, the Authority will look at whether there is evidence - circumstantial or
otherwise - that shows that the association members, in their individual capacity,
committed themselves to a common scheme designed to achieve an unlawful objective.
In some cases, evidence of actual knowledge of and participation in the activity that
constitutes the restrictive trade practice are enough to infer an agreement on the part of
the individual members.
38. The Authority considers that, in assessing the conduct of a trade association the
assessment criteria defined under section 21(1) may also be applicable. Further, in
assessing agreements formed in the context of an association, the Authority will
consider the following factors among others whether:

there is sufficient evidence that the agreement operates as an absolute ban on
competitive bidding; or

the agreement interferes with free market price structures; or

the agreement limits production or markets by creating a market that is
unresponsive to consumer needs.
Hard-core Restrictions/Cartels: Price Fixing, Collusive Tendering and Market Division
39. A cartel consists of two or more actual and/or potential competitors (that is, suppliers or
buyers of goods or services) agreeing to lessen, prevent or distort competition by fixing
prices or output; allocating customers or markets; or rigging bids or tenders. For
example, members of a cartel may act collectively like a monopolist and agree to
collectively increase or decrease the price of goods or services. Consumers may be
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harmed by higher prices while new entry may be discouraged by artificially agreed
lower prices. The following non-exhaustive list gives examples of the types of
agreements or practices that may constitute a form of a prohibited cartel conduct:

Contracts or agreements or decisions or concerted practices among competitors
on prices charged to their customers;

Contracts or agreements or decisions or concerted practices among competitors
to limit their output;

Contracts or agreements or decisions or concerted practices among competitors
to allocate customers, territories, products or suppliers;

Contracts or agreements or decisions or concerted practices among competitors
to limit innovation and proliferation of new technology;

Contracts or agreements or decisions or concerted practices among competitors
to rig bids or tenders.
Price Fixing
40. The Authority considers price fixing to include:
 fixing the price itself; or
 fixing an element of the price such as fixing a discount, setting a
percentage price increase; or
 setting the permitted range of prices between competitors;
 Setting the price of transport charges (such as fuel charges), credit interest
rate terms etc;
 An agreement or arrangement to indirectly restrict price competition in
some way such as recommended pricing;
 Agreeing to share price lists before prices are increased either directly or
indirectly through an industry or trade association or to require
competitors to consult each other before making a pricing decision.
COLLUSIVE TENDERING (BID-RIGGING)
41. Collusive Tendering usually occurs between competitors or potential competitors who
tender for the provision of goods or services. The Authority considers collusive
tendering, or what is commonly called bid-rigging, to include:
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

Taking turns to win competitive tenders. This may involve undertakings
agreeing to submit cover bids/tenders (high) that are intended not to be
successful – where the unsuccessful bidders/tenderers may get kick-backs;
Bid suppression where undertakings agree that only one of them will
submit a bid for the contract and bid rotation where the parties to the
agreement take turns to win contracts.
42. More than one of these bid-rigging practices can occur at the same time. The
Authority considers that, for example, if one party to the agreement is designated to
win a particular contract, the other parties could avoid winning either by not
bidding (“bid suppression”), or by submitting a high bid (“cover bidding”) or by
intentionally wrongfully completing the bid documents. The latter types of activities
are a violation of Section 21 and section 22 of the Act.
MARKET DIVISION
43. The Authority considers that market division may involve competitors agreeing to
allocate customers between themselves or agreeing to stay out of each other’s
geographic territory or customer base.
44. Agreeing to buy only from certain suppliers could also be deemed to be anticompetitive. Competitors agreeing to specialise in certain products, ranges of products
or in particular technologies could also be deemed to be anti-competitive.
Assessment Criteria Applied to Hard-core Restrictions
45. Section 21 of the Act provides that agreements which have as their object or effect the
prevention, distortion or lessening of competition in trade in any goods or services in
Kenya, or a part of Kenya are prohibited, unless they are exempt.
46. The prohibited agreements or decisions or concerted practices apply to parties in a
horizontal relationship, i.e., undertakings trading in competition. Section 21 therefore
outlines the assessment or review standard to be applied to cartels.
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47. The Authority considers that horizontal collusive agreements like cartels are subject to
“object” assessment, that is, strict or per se scrutiny for which no defences can be
asserted. The Authority will only consider the content and nature of the agreement and
not the effect of the agreement.
VERTICAL AGREEMENTS
48. A vertical agreement is an agreement between undertakings each of which operates at a
different level in the production or distribution chain. Vertical restrictions can apply at
production level between manufacturer and wholesaler or at the level of distribution
between wholesaler and retailer.
Vertical restriction could be either on price or non-price. Examples of vertical
agreements may include:

Resale Price Maintenance (“RPM”): this is a practice where the manufacturer or an
upstream seller of a good sets a fixed or the minimum price at which his distributor
or a downstream buyer can resell a good. Section 21(3)(d) prohibits the setting of a
minimum resale price. This could involve any form of RPM including recommended
retail pricing which serves as a focal point for downstream collusion and would also
be deemed as anti-competitive. For example, a manufacturer sets the minimum price
for which its products are sold at the retail level. The result is that all the
manufacturer’s re-sellers (e.g., retailers) do not compete on price with competing
products.

Tied Selling and Bundling: This occurs when the purchase of product A (the tying
product) is conditional on the purchase of product B (the tied product) where A
cannot be purchased alone, while B can. Pure bundling occurs when both products
can only be purchased together. Mixed bundling occurs where the products can be
purchased separately but it is cheaper to purchase them together. The Authority
considers that this can be one typical way in which a dominant firm leverages
market power in one market into a related market by tying or bundling products
together. The Authority will scrutinise this type of conduct to assess whether the
undertaking in question is a dominant firm as in this context the resultant effect on
the market can be a reduction in competition in the related market principally
because the conduct results in exclusion of rivals from the relevant market.

Discount and Rebate Agreements: Loyalty discounts and rebates (“loyalty
discounts”) are considered to be incentive schemes offered by firms to their
customers where they meet certain sales or purchasing volume requirements. These
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volume thresholds are formulated according to a percentage of the total
requirements (“fidelity discounts and rebates”), or an individualised volume target
(“target discounts and rebates”). Rebates or discounts can also be formulated
according to the percentage of the customer’s total product requirement that is
purchased from the firm (“market-share rebates”). When a customer is offered an
incentive scheme whereby 100% of the product volume or its requirements must be
obtained from the undertaking to take advantage of the rebate scheme, this is called
an exclusive rebate. Additionally, the rebate can be offered incrementally, that is, the
rebate is applicable to each unit purchased above the undertaking-established
threshold (“incremental rebate”), or to all units purchased below or above the firm
established threshold (“all-unit rebate”), and the rebate can apply to a single product
(single product rebate) or right across the board to all products offered by the firm
(“multi-product rebate”). Loyalty rebates granted by a dominant firm will attract the
close scrutiny of the Authority to establish whether they are exclusionary and create
barriers to entry.
Intellectual Property Agreements Prohibited under Section 21(3)
49. In general, the Authority considers that an intellectual property arrangement may
go beyond the limits of legal protection where it imposes unreasonable conditions
on a licensee in circumstances where it can be adduced that, among other things:

There is an imposition of a condition that goes beyond what is necessary to protect
the Intellectual Property Right (“IPR”); and

The licensing arrangement is likely to affect adversely the prices, quantities, quality
or varieties of goods and services.
50. The Authority regards IPRs as including, copyrights and related rights, trade marks,
geographical indications, industrial design, and patents. The Authority considers
that the following is a non-exhaustive list of examples of intellectual property
agreements prohibited under Section 21(3)(h) of the Act:

Exclusive licensing agreements: the Authority considers that these types of
agreements can give rise to anti-competition concerns. Examples of such agreements
include cross licensing by undertakings in oligopolistic market, grant backs and
acquisitions of IPRs, including, patent-pooling agreements whereby firms in a
manufacturing industry decide to pool their patents and agree not to grant licenses
to third parties, at the same time fixing prices and supply quotas; and tie-in
arrangements where a licensee may be required to acquire raw materials solely from
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the patent holder, thus foreclosing other producers on the market from accessing the
license.

Royalty Arrangements: where the licensee has to pay royalties for the patented
product as well as unpatented information relating to the patent.

Vertical Price-Fixing Agreements: the price at which the licensee can sell is set by the
patent holder.

Territorial Restrictions: where the licensee is restricted to certain geographic regions
or groups of customers that are not covered by the patent.

Tying and Coercive Arrangements: where a licensee may be coerced by the licensor
to take several licenses in intellectual property even though the former may not need
all of them.

Research and Development/Standard Setting Arrangements: where there is an
agreement among undertakings to develop a new technology or set a standard for
an industry and only just a few of the undertakings in the market can viably engage
in this venture to the exclusion of other efficient competitors and to the detriment of
consumers.

Undue Influence over Quality Control: where there is an imposition of quality
control on the licensed patented product beyond what is necessary for guaranteeing
the effectiveness of the licensed patent.

Application of Certain Conditions Applied to Trademark Use: the imposition of a
trademark use restriction where the owner of a trademark imposes territorial
restrictions on the licensee of a trademark, limiting the licensee to the manufacture
and sale of the trademark to a specified geographic area or market or where the
trademark owner grants licenses for the sale of a trademark product on the
condition that the licensee also takes unwanted or broader bundle/package of
products.

Other Anticompetitive Licensee Restrictions: the imposition of other undue
restrictions on the licensee, such as, limiting the maximum use the licensee may
make of the patent, setting a specific or minimum price at which the patented
product may be sold, imposing a territorial restriction on sale after the first
authorised sale of the patented product has occurred or imposing a restriction on
the licensee from using, selling or licensing a competitor’s technology.
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Agreements among Inter-Connected Companies under Section 21(5)
51. The Authority considers that it will assess the provisions under Section 21(5) in
contexts where:
 (i) one undertaking may acquire shares in another or scenarios where two
companies in a related business may share a director (interlocking
directorships) and
 (ii) where the occurrence of such transactions would not trigger the
merger control procedures under Part IV of the Act but nevertheless
require competition law scrutiny.
52. It has previously been stated that two or more undertakings that form part of a
single economic entity do not constitute a plurality of actors for the purposes of
establishing that there is an agreement and that the test of whether the undertakings
are to be considered as part of a single economic entity requires an assessment of the
legal notion of who has control. However Section 21(5) is applied keenly in the
context of horizontal restrictive agreements among undertakings where the
“significant interest” referred to under the section may be deemed to be share
ownership or a scenario of interlocking directorship/management that is less than de
facto/legal control but which allows one undertaking to be privy to the business
strategy of another or significantly influence the business conduct of that other
party.
OBJECT OR EFFECT
53. An agreement is prohibited under Section 21(1) of the Act by establishing a prima
facie showing of an agreement that has as its object the restriction of competition or
by adducing proof that the effect of the agreement is to restrict competition. The
Authority considers that words “object” or “effect” are used disjunctively under the
section. The Authority will not try to prove both. The Authority will undertake an
alternative as opposed to a cumulative assessment for a finding of an infringement.
Some agreements may be established as “object” restrictions and others may be
considered to be “effect” restrictions. Some agreements may be subject to strict, per
se analysis or “object” for which no defences can be asserted and some agreements
may be subject to a full effects assessment or rule of reason analysis.
54. Under its “object” assessment or per se assessment, the Authority considers whether
there is evidence of an agreement or concerted action. If there is evidence of an
agreement, the infringement has been proved and no further assessment need be
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conducted. The prima facie showing of an agreement establishes that the prohibited
conduct has, in fact and in law, been committed.
55. The “effects” assessment or a rule of reason analysis is used to assess certain conduct
that could have a redeeming competitive value such as information sharing among
competitors, unilateral or single-firm anticompetitive conduct like certain vertical
pricing arrangements, collaborations on technical, safety, and educational standards
for an industry and also other activities which generally tend to promote or preserve
quality preservation in an industry.
56. The Authority considers that collusive horizontal agreements, such as collusive
tendering, market division or customer allocation agreements and horizontal price
fixing agreements may be subject to strict, per se or object assessment. While most
vertical agreements, such as tying and bundling, exclusive dealing and licensing
agreements and vertical pricing and distributorship agreements may be subject to an
effects assessment or a full rule of reason analysis.
ASSESSING COMPETITIVE EFFECTS
57. In assessing whether an agreement restricts or distorts competition on a market the
Authority will look at the effects of a conduct on the market. In this context the
Authority is concerned with all types of effects the conduct can have on the market
— that is, both vertical effects and horizontal effects.
58. Horizontal effects refer to the impact that one seller has on his competitor — one
primary issue for the Authority is whether there is horizontal control owing to a
combination of the sellers products and its substitutes, the seller’s competitor
worsens his product-offering, by say, raising prices or reducing/limiting his output.
59. Vertical effects refer to the impact that seller has on his buyer (“downstream effect”)
— the Authority may not be overly concerned with vertical effects because the
effects are usually procompetitive.
60. The Authority considers that the effect of the exercise of vertical control of a seller
over his buyer, in a setting where there are substitute products, is that it leads the
competing seller/seller of the substitute product to improve product offering or to
lower prices. However, where vertical control is exercised in a setting where there
are no substitutes products (no other brands of the same product for example), there
is hardly scope for the market to realise any positive competitive effects of the
Page 20 of 38
vertical control. Vertical effects can also lead to a situation where the buyer controls
the seller (“upstream effect”) because the market is one in which there is buyer
power.
61. The Authority considers that horizontal effects can non-exhaustively manifest as:

Total or partial exclusion of rivals from markets.

Complete lack of competition in the market.

Supranormal profits owing to no competition and no price competition.

Coercion and exploitation of buyers and end users.

Monopoly pricing.

Lack of innovation and no dynamic efficiency – no research and
development into improving productive methods or improving product
design.

Overall depressed levels of consumer welfare and suppression of overall
goal of competition and living standards for citizens.
62. In general horizontal agreements tend to have anticompetitive effects. Though there
are exceptions like technical standards-setting agreements.
63. The Authority considers that vertical effects typically manifest when there are many
brands competing against each other and can non-exhaustively include:

Improvement of product offering to the final customer (“end user”).

Encourage dealers to promote a manufacturer's products more vigorously.

Encourage manufacturers to help dealers by providing services or
information benefiting consumers.

Mutual stability of supply, thus allowing for longer term planning.

Allow risk sharing between seller and distributor of low demand.
Page 21 of 38

Allow control of distribution quality.

Prevent inter-brand free-riding.

Economies of scale and scope.

More investments and innovation.

Stronger inter-brand competition.
64. The Authority considers that vertical effects typically manifest when there are no
competing brands and may include:

Market foreclosure — blocking of access of rivals to consumers targeted in
the relevant market or another market.

Market exclusion — blocking of new entrants from entry to markets.

Increased prices to consumers and limitation of quantities of goods.
Exploitative and Exclusionary Effects
65. Some effects impact rivals and some exploit consumers.
 Exploitative effects- Business strategies that result in excessively high
prices or scarcity of goods are considered to have exploitative effects.
 exclusionary effects- Business strategies that result in removal of
competitors from markets or from accessing consumers or weakening of
competition from rivals and erecting barriers to entry to exclude new
rivals from the market are said to have exclusionary effects.
66. In conducting its “effects” assessment the Authority will define the relevant market.
In certain “object” cases the Authority may consider it necessary to define the
relevant market, to prove the colluding undertakings are in a same line of business. 2
2
See Guidelines on the Definition of the Relevant Market.
Page 22 of 38
BURDEN OF PROOF
67. The Authority bears the burden of adducing proof that an agreement has its object
the restriction or distortion of competition. The Authority also has the burden of
proving, under an effects assessment or a rule of reason analysis, the anticompetitive
effects in the relevant product and geographic markets.
68. One key component of the Authority’s “effects” assessment will be whether the
countervailing benefits, as adduced by the defence, have a net positive impact on
consumer welfare.
 The burden to adduce proof in defence of any conduct deemed to be a
restriction by the Authority shifts to the respondent/undertaking who
must adduce evidence to demonstrate that the alleged restraint promotes
a sufficiently pro-competitive objective.
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Section 4 - The Analytical Framework used in Abuse of Dominance Cases
69. Section 24(1) prohibits any abuse of a dominant position by an undertaking in a
market for goods or services in Kenya. A dominant position is defined under Section
4(3) of the Act as position in a market where the undertaking
 Produces, supplies, distributes or otherwise controls not less than one-half
of the total goods of any description that are produced, supplied or
distributed in Kenya or any substantial part thereof; or
 Provides or otherwise controls not less than one-half of the services that
are rendered in Kenya or any substantial part thereof. The Authority
considers that a dominant position may allow an undertaking to act
independently of, or unconstrained by, its competitors and customers,
with respect to how it makes decisions on production, supply, distribution
and pricing levels.
70. A range of actions can constitute abuse including;
 Restriction of entry into a market,
 Preventing a competitor from engaging in competitive conduct,
 Eliminating or removing a competitor from a market,
 Imposing unfair purchasing and selling prices,
 Limiting production of products to the prejudice of consumers,
 Exploitation of consumers or suppliers through the usage of exclusive
dealing, or
 Market restrictions or tied selling.
 Section 24(2) gives examples of a non-exhaustive list of scenarios that may
constitute an abuse.
71. In determining whether there has been a contravention of Section 24(1) the
Authority will assess whether the undertaking subject of the infringement
proceeding is dominant. If the undertaking is dominant, the Authority will assess
whether the undertaking is abusing its position of dominance.
72. In assessing abuse of dominance cases, the Authority will focus on the impact of the
conduct on the market — that is whether the conduct is likely to restrict or harm
competition on the market. The Authority therefore defines the relevant market to
assess;
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

Whether an undertaking has market power and can harm competition and
To ascertain who the market players are with a view to establishing the
effect of the conduct on the competitive process as a whole. The starting
point in analysing any abuse of dominance case is therefore to define the
relevant market. Consequently, any assessment of the effects of the abuse
on the market will necessarily require a definition of the relevant market.3
THE DOMINANCE TEST: WHEN MARKET POWER AND MARKET SHARE ARE FACTORED INTO
THE ASSESSMENT
73. The Authority considers that there is a presumption of dominance if an undertaking
controls a share of 50% or more of the supply of goods or services in Kenya or a
substantial part of Kenya.
74. Having regard to Section 3(g) of the Act, where an undertaking has less than 50%
market share, the Authority deems it necessary to provide guidance that in its
assessment of dominance it may assess additional assessment criteria such as market
power and market shares. The Authority considers the following factors as
important factors to consider in establishing whether an undertaking has market
power;
 Barriers to entry,
 Countervailing power,
 Product differentiation,
 The stability of market shares, and
 The ability of the undertaking to act independent of its customers and
competitors.
Market Power and Market Share
75. The Authority considers that market power gives an indication of;
 Whether an undertaking has the ability to act unconstrained by, or to an
appreciable extent, independently of its customers and competitors
 The ability of an undertaking to control prices, profitably sustain prices
above competitive levels or restrict output or quality below competitive
levels.
76. The Act presumes that a market share of at least 50% is evidence that a firm is
dominant. Where an undertaking has less than 50% market share, the Authority will
consider whether the undertaking has market power or the ability to exercise market
3
For explanations of the foregoing see Guidelines on the Definition of the Relevant Market.
Page 25 of 38
power. In this regard, the Authority may consider whether the undertaking can set
prices, outputs or trading terms without being effectively constrained by its
customers or competitors in the relevant market.

The Authority considers that while market shares can be a useful indicator of
dominance, it is a limited indicator of existing competition and it cannot be used
as the sole indicator of market power even when certain market share levels
strongly suggest that the best descriptor of the market structure for the relevant
market is a monopoly.
 The Authority considers that market share levels assessed against the
market concentration levels, possible likelihood of entry, any entry
barriers, and countervailing buyer power may yield a better mapping of
whether an undertaking has market power. An undertaking with a 50% or
100% market share that can act unconstrained by customers and
competitors will be considered dominant and having market power.
77. The Authority, therefore, considers that a number of additional factors may factor
into its assessment of whether an undertaking does not meet the market share
dominance threshold but it has market power.

Actual Competition: the markets shares of existing competitors on the market
will be used by the Authority in its assessment of any constraints that are
imposed on the undertaking subject of the infringement.

Potential Competition and Barriers to Entry: the Authority will consider
constraints that may be imposed by potential competitors. If a market is not
easily entered then the ability of a potential entrant to constrain a dominant firm
may be too remote to consider. For example, an undertaking is likely to have
market power in a market that has high barriers to entry than one in which entry
and exit of competitors is easy. Where there is no threat of entry an undertaking
that controls a substantial market share will exercise market power over a long
and sustained period of time. Where entry is easy, new undertakings will enter
the market and compete with the incumbent thereby reverting prices and
services to competitive levels. Barriers to entry are generally put into two
categories:
 Structural barriers to entry- Structural barriers to entry include, but are
not limited to, regulatory barriers, sunk costs, economies of scale, access to
key natural resources, network effects.
 Behavioural barriers to entry- Behavioural barriers to entry include, but
are not limited to, predatory pricing, margin squeeze, an undertaking
Page 26 of 38
holding on to a big proportion of industry’s excess capacity, product
differentiation and advertising, vertical relationships between
incumbents, collusive behavior between incumbents.

Product Differentiation: the Authority will consider the impact that product
differentiation will have on a market. The Authority will assess whether product
differentiation based on function or kinds of buyers can impact the undertaking’s
market power.

Ability of the Undertaking to Sustain a Price Increase over Time: In addition to
the factors listed above, the Authority will assess how sensitive the undertakings
sales are to increases in prices. The Authority will seek evidence to demonstrate
that the market is contestable and sustained price increase will not be profitable
and sustainable.

The Degree to which Countervailing Power Impacts the Undertaking’s Ability to
Exercise its Power in a Market: the Authority will consider if there are effective
mechanisms that can be used by customers to counter the ability of the
undertaking to exercise market power. The Authority will assess any credible
tactics that would be applied by customers. For example, whether customers will
sponsor entry or have in the past taken similar actions.

The Degree to which Customer Perception, Innovation, and Import Competition
Drives Competition in the Market: the Authority will seek evidence to
demonstrate that customers are not brand loyal and would easily switch to
alternative products or sources of supply. The Authority will also consider the
prevalence and penetration of innovation on the ability of the undertaking to
exercise market power over a sustained period of time. The Authority will also
consider the role of imports in the market. The Authority will seek evidence to
demonstrate whether there are no barriers to imports and if imports constrain
the ability of the undertaking to exercise market power.
EVIDENCE ON MARKET SHARE
78. The Authority considers that market shares can, non-exhaustively, be assessed in
terms of revenues (measured by monetary sales), demand units (unit sales), output,
potential capacity (to produce or sell) or, in certain natural resource industries,
reserves as evidenced in:
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
Data provided by undertakings in the relevant market including sales data and
estimates of the market shares of their competitors;

Documents produced by trade associations;

Market research reports; and

Independent and verifiable market reviews.
The parameter to be used to calculate market share will depend on the availability of
data and the factors that may be relevant for effective competition in a market.
ABUSE OF DOMINANCE
79. In establishing this element of Section 24(1), the Authority considers that abuse of
dominance may be manifested by the use of practices that allow an undertaking to
preserve, entrench or enhance its market power. In its assessment of abuse, the
Authority will consider the specific practice in question and the state of competition
in the market with and without the presence of the alleged abuse.
80. The Authority will mainly assess whether the conduct results in foreclosure or
exclusion of rivals or results in exploitation of consumers.
81. In some instances the Authority may consider whether the conduct strengthens
barriers to entry.
Categories of Abuse of Dominance
82. Abuse of dominance is generally put into two categories:

Exploitative Abuses: this involves those types of conduct by a dominant
undertaking that exploit customers or suppliers (for example, excessive pricing)
without necessarily affecting the competition process. In this context the
Authority mainly considers the abusive conduct relative to consumers. The
Authority may assess whether the conduct results in excessive profits owing to
the setting of exploitative prices.

Exclusionary Abuses: this involves those types of conduct by a dominant
undertaking that will lead to the removal of an actual or potential competitor or
the suppression or weakening of competition in a market. Exclusive abuse may
Page 28 of 38
include predatory pricing or certain discount schemes or raising the costs of
entry which are intended to foreclose a market from competition. It may also
include a refusal to deal that cannot be objectively and reasonably justified by the
dominant undertaking. In this context the Authority mainly considers
anticompetitive conduct relative to competitors and potential entrants. The
Authority may assess whether the conduct prevents equally efficient competitors
from competing.

The following practices may, depending on the facts of the case, be assessed for
both their exploitative and their exclusionary effects.
Unfair purchase or selling prices or unfair trading conditions
83. Section 24 of the Act prohibits a dominant undertaking from directly or indirectly
imposing unfair purchase or selling prices or other unfair trading conditions.
However, the Act does not define the meaning of “unfair purchase or selling prices
or other unfair trading condition”. The Authority’s assessment in this regard may
include an assessment of whether prices are excessively high or excessively low.
84. The Authority considers that an excessive price is one where the price for a good or
service bears no reasonable relation to the economic value of that good or service
and is higher than the said economic value.
85. In its assessment, the Authority may consider whether a dominant undertaking has
implemented an exploitative pricing strategy, that is, either an excessively low
pricing strategy or an excessively high pricing strategy or both in order to weaken or
eliminate competition in the short term so as to exploit customers or consumers at a
later stage.

Excessively Low Prices: low prices in a market may indicate to the Authority that
there is vigorous competition between competitors in a market and this benefits
customers and consumers. However, a dominant undertaking may use a
predatory pricing strategy by setting an excessively low price intended to
eliminate competitors in order for it to be in a position to exploit customers at a
later date. The Authority will seek to remedy this type of conduct where the
pricing strategy is unprofitable in the short term. The Authority will seek to
ascertain whether the dominant undertaking will be making losses as price is
lower than average variable cost (as a proxy for marginal cost). The Authority
will also consider whether the conduct has led to the elimination of a significant
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and/or an efficient competitor and whether the dominant player can recoup its
losses after it would have eliminated or weaken its competitor(s) from the
market.

Excessively High Prices: a dominant undertaking may be in a position to charge
excessively high prices if it is in control of a product or service (that has no
readily available substitutes) that is essential to competitors. Excessively high
prices may occur in the form of a margin squeeze. The concept is one that
involves situations in which a vertically integrated dominant undertaking not
only engages in self-supply of an essential input used on a downstream market,
but also supplies independent third parties active on the downstream market,
which are in competition with its own business downstream.

A vertically integrated undertaking with a dominant position in an upstream
market prevents its non-vertically integrated downstream competitors from
achieving an economically viable price-cost margin. This type of conduct may be
assessed as excessive pricing or as price discrimination or as predatory pricing
resulting in both exploitative and exclusionary conduct by a dominant
undertaking. The Authority recognizes that this type of strategy can be
implemented in various forms. For example this type of conduct may include:

Discriminatory margin squeeze where a vertically integrated dominant
undertaking charges its downstream competitors a higher upstream price
than it charges its own downstream business.

A non-discriminatory margin squeeze where a vertically integrated
undertaking raises the price of the upstream input to its downstream
competitors and its own downstream business. This has the effect of
raising the costs of all the downstream competitors. However, the
vertically integrated dominant undertaking is able to absorb the raised
cost of its own downstream business by cross-subsidizing it from its
upstream or other operations.

A predatory margin squeeze where a vertically integrated undertaking
lowers its downstream price below the costs of production and adequate
margin with the intention of eliminating an effective competitor and
recouping short-term losses at a later period.
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86. The Authority considers that in assessing unfair prices or trading conditions it may
seek evidence on :


Analysis of prices charged to various customers and suppliers (including
affiliated companies).
Analysis of the structure of costs of production of goods or services.

Analysis of actual costs of production of goods or services.

Analysis of prices and costs in a competitive market or comparable market.

Analysis of the profitability of the dominant undertaking.
Price Discrimination
87. This form of abuse by a dominant undertaking involves an assessment of whether as
between equivalent transactions, there is discrimination between trading
undertakings in the supply of goods or services. This form of abuse involves any
discount, allowance, rebate or credit given or allowed in relation to the supply of
goods or services. The conduct may apply to a vertically integrated undertaking as
well as a non-vertically integrated one.
88. The Authority considers whether an undertaking has control over price, has the
ability to, and is engaged in, segregating customers into different groups and there
is detriment to consumers.
Tying and/or Bundling
89. Tying is a form of abuse in which a dominant undertaking requires customers that
purchase one product or service (“tying good or service”) to purchase another
product or service (“tied product or service”). Bundling refers to the manner in
which products or services are offered or priced for sale to customers or consumers.
Like controlling the application of dissimilar conditions, the consumer welfare
effects of tying and bundling are assessed.
90. The Authority will assess whether a dominant undertaking can abuse its position in
the market by tying or bundling products or services to the detriment of consumers.
However, the Authority understands that in some cases tying and bundling
strategies can provide customers with better product offerings.
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91. To establish an abusive tying and/or bundling strategy, the Authority may seek to
establish that the products or services that are subject to the tying/bundling are
distinct. That is, the products or services are capable of being purchased separately
and there are examples of the products or services being purchased or supplied
separately. The Authority will seek to establish that the tying or bundling will
negatively affect competition in either the tied market or tying market or both.
Abuse of an Intellectual Property Right
92. Intellectual property right can necessarily confer a dominant position on the right
holder in respect of the provision of certain goods or services. The Authority is not
against the exclusive granting of such right to an undertaking. In fact, the Authority
recognises that the dynamic effects of intellectual property right on innovation and
competition and will factor this into its assessment. It also recognises the need to
reward creators and innovators and protect them from unscrupulous parties who
may copy or free ride on their works and thereby discourage innovation and
damping effective competition.
93. It is generally recognised that the legitimate exercise of IPR by a dominant
undertaking is not an abuse in itself. However, an abuse may arise in the manner in
which a dominant undertaking exercises its IPR in relation to the granting of use,
territorial limitation and payment of royalties.
 For example, an abuse of dominance may result if the dominant undertaking
uses its IRP to prevent the development of a new product or market. A dominant
undertaking may seek to impose any of the conditions listed under paragraph 44
above (non-exhaustive list of examples of intellectual property agreements prohibited).
BURDEN OF PROOF
94. The Authority bears the burden of proving the abuse. Any arguments asserted by
the undertaking to seek relief from infringement proceedings brought by the
Authority pursuant to Section 24(1), must be proved by the undertaking.
Undertakings are free to provide objective justification or defence of their conduct
under section 34 of the Act.
95. The undertaking will be afforded the opportunity to assert its arguments for why
the conduct justified in its response to the Authority’s notice which will be issued in
a timely manner during its enforcement proceeding.
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Section 5 - Categories of Exempted Conduct under the Act
97. Having regard to the object of the Act, as defined under Section 3(a), to promote and
enforce compliance of the Act, the Authority provides the following explanations on
the types of exemptions that an undertaking may seek before the Authority. The
Authority considers that the Section 3(a) objective and others listed under Section 3
of the Act provides a basis for the Authority rules to explain the enforcement
processes of the Authority, with a view to simplifying the legislative framework,
providing legal security to the business community, thereby giving rise to higher
levels of compliance.
98. The following guidelines therefore explain when an undertaking may seek an
exemption and gives a non-exhaustive list of examples that may be subject to the
grant of an exemption.
WHEN CAN AN UNDERTAKING SEEK AN EXEMPTION?
99. An exemption may be sought where an undertaking, that is not the subject of an
infringement proceeding, intends to engage in conduct that contravenes Section
21(1) and Section 22(1). In that context it may apply to the Authority pursuant to
Section 25 for an exemption.
100. The Authority considers that the exemption process will apply to: (i)
undertakings which are in the process of implementing a concluded agreement and
(ii) undertakings which have entered into and implemented on-going agreements
prior to the enactment of the Act.
101. An exemption granted by the Authority can be revoked if the Authority has been
supplied with misleading or false information, there is a material change in
circumstances, or where there is non-compliance with an imposed condition.
EXEMPTIONS FOR MAINTAINING OR PROMOTING EXPORTS
102. The Authority considers that the following is a non-exhaustive list of agreements
or arrangements that may be considered to maintain or promote export and may be
subject to an exemption pursuant to Section 26(3)(a):

Agreements or arrangements that are directed exclusively at achieving a
demonstrable export-related efficiency enhancing goal for the undertakings
Page 33 of 38
involved in the export arrangement such as the sharing of the fixed costs of
transportation, distribution or marketing.

Export association arrangements intended to aid small and medium-sized
undertakings with certain aspects of the exporting process such as the high costs
associated with export and which leads to the efficient provision of export trade
services.

Export-supply coordination arrangements intended to coordinate supply to
overseas markets.

Information exchange arrangements relating to product logistics such as
transport, marketing, labelling or product development among exporters where
the information exchanged is solely directed at enhancing the export process of
products designated for export and the exporters involved in the arrangement
are quarantined from activities on the domestic market.

Export arrangements which are likely to provide effective and essential support
for small and medium sized undertakings to overcome barriers to entry to export
markets.
103. In all the cases considered for exemption under this category, including the
foregoing examples, the Authority considers whether the export arrangements have
any anticompetitive effects on competition in the domestic market and the Authority
will look at whether it is presented with evidence that competition in the domestic
markets will not be significantly lessened.
104. The Authority will also consider whether the evidence presented by the
exemption applicant demonstrates that without the agreement or cooperation
among the undertakings their prospects of participating effectively in the overseas
market are significantly reduced.
105. The Authority considers that any arrangement that relates to the supply or
pricing of a good or service in the domestic market is explicitly not eligible for an
exemption in this context.
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EXEMPTIONS FOR AGREEMENTS THAT IMPROVE OR PREVENT THE DECLINE OF PRODUCTION OR
PROMOTE TECHNICAL OR ECONOMIC PROGRESS
106. The Authority considers that the following is a non-exhaustive list of agreements
or arrangements that may be subject to an exemption pursuant to Section 26(3)(b) or
Section 26(3)(c), as may be applicable:

A research and development agreement whereby each undertaking agrees to
pool their research capabilities, where the agreement may lead to significant new
capacity to the market in Kenya, thereby contributing to improvement in
production or economic growth, and in circumstances where it can be
demonstrated that the consumers are in a better position owing to the
implementation of the agreement.

An agreement which results in the production or supply of new and improved
products or services where any benefits to be derived by consumers stemming
from introduction or improvement of the product or service exceeds any harm
from the maintenance or an increase in price caused by the restrictive agreement.

Agreements for which there are significant identifiable technological benefits
directly flowing from the agreement and in circumstances where the net effect to
competition in Kenya is either benign or pro-competitive.

An agreement for which evidence is adduced that a technical or design standard
may lead to an improvement in production by reducing costs, improve quality,
reduce waste and consumer search cost and in circumstances where it can be
demonstrated that these benefits flow directly from the agreement.

An agreement that promotes the competitiveness of small undertakings.

An agreement that is designed to maintain the stability or encourage growth of
an industry in Kenya.

An agreement that contributes to the maintenance or promotion of exports and
in circumstances where evidence can be adduced to demonstrate that a
significant benefit flows directly from the agreement and the agreement may
lead to economic progress in Kenya.
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EXEMPTIONS FOR CONDUCT THAT HAS A NET PUBLIC BENEFIT
107. The Authority considers an agreement that improves the net balance of
payments as an example of an arrangement that would be considered to have a net
public benefit pursuant to Section 26(3) (d).
108. The Authority reinforces that it would give good consideration to any argument
presented by an exemption applicant, in this context, where the applicant
demonstrates that there is, ultimately, value to the Kenyan purchaser or consumer,
such value having attendant elements of achieving economic development, elevated
levels of consumer welfare or economic efficiency.
109. In all the foregoing examples and in all applications presented to the Authority
in this context, the Authority will consider whether information supplied to it by the
applicant demonstrates that there is a net benefit to the public that outweighs any
possible detriment to competition that results or is likely to result from the
agreement, arrangement or decision in question.
110. In considering whether the agreement, arrangement or decision in question acts
as a possible detriment to competition, the Authority looks at whether there is
evidence that allowing the arrangement denies or is likely to deny the public (that is,
consumers, purchasers or otherwise users of a good or service) substantial benefits
and advantages.
 If the benefit claimed by the exemption applicant accrues to the public (and not
just to the undertakings party to the arrangement), and those benefits outweigh
any foregone advantages to the public owing to the lessening of competition
presented by the arrangement, the Authority may consider granting an
exemption.
111. The Authority will therefore consider the market with and without the
agreement or arrangement for which the exemption is claimed and make a
determination, on balance, of whether there are public benefits that outweigh the
effects on the public of a lessening of competition.
112. The evidence presented to the Authority to substantiate the cause for a grant of
an exemption must be such that it enables the Authority to establish that there is a
commercial likelihood that the exemption applicant will, upon the grant of the
exemption, deliver or bring about the public benefit. The Authority must be satisfied
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that the benefit will, in a commercially-feasible manner, be a consequence of the
agreement for which the exemption is claimed.
EXEMPTIONS FOR CERTAIN INTELLECTUAL PROPERTY ARRANGEMENTS (AGREEMENTS
UNILATERAL PRACTICES)
AND
113. The Authority considers that the following is a non-exhaustive list of agreements
or arrangements that may be subject to an exemption pursuant to Section 28(1):

Any agreement or practice undertaken whose only object is the exercise of any
right or enjoyment of any interest derived under any intellectual property
legislation in Kenya.

A technology transfer license agreement where the undertakings to the
agreement are not competitors and where the relevant market shares of the
undertakings party to the agreement or arrangement is insignificant.

Where the owner of an intellectual property licenses, transfers or sells the
intellectual property to an undertaking and there is no risk of the creating,
enhancing or maintaining a position of dominance in the market.

The mere refusal of an intellectual property owner to license, transfer or sell the
intellectual property, in circumstances where the refusal does not prevent,
restrict, or lessen competition and any competitive harm can be demonstrated to
clearly flow from something more than or other than the mere exercise of the
intellectual property right to refuse. The Authority will not intervene in such a
case unless the competitive harm stems solely from the refusal and nothing
more. Also, in this regard it is to be noted that the mere existence of an
intellectual property right would not prevent the Authority from subjecting
otherwise anticompetitive conduct to enforcement proceedings.
114. The Authority considers these types of exemptions may involve efficiency
considerations. There may be instances where the existence of an intellectual
property right may foster dynamic efficiency and competition by facilitating
technical or economic progress resulting in sustained period of increases in product
selection, quality, output and productivity and therefore growth and economic
progress in Kenya.
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EXEMPTIONS
AGREEMENTS
FOR
CERTAIN TRADE ASSOCIATION
OR
PROFESSIONAL ASSOCIATION
115. The Authority considers that the following is a non-exhaustive list of agreements
or arrangements that may be subject to an exemption pursuant to Section 29(1):

Agreements among undertakings in a professional association where the
agreement relates to the setting of professional fees to be paid and where the fees
are mandated by a statute;

An agreement by the members of a professional association to publish guidelines
on fees that may be applicable when procuring professional services and the fee
guidelines are necessary to maintain professional standards or for the ordinary
functioning of the profession;

Decisions by the members of a professional association which are made to ensure
industry health, safety or ethical standards and any restrictions in question do
not;



Suppress a member’s ability to practice his profession, seek employment,
engage in commercial and economic activities related to his/her
profession, advertising his products or services, where advertising is not
prohibited under statute, restrict the ability of the professional member to
form partnerships; or
Otherwise lead to conduct which is a contravention of the Act.
Establishment of professional standards by a professional association that do not
ordinarily prevent functioning of the professionals or curtail commercial practice
or service in the industry concerned.
***
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