Market Inquiry into Kenya’s Leasing Sector – Key Issues


Market Inquiry into Kenya’s Leasing Sector – Key Issues


On 16th March 2018, the Competition Authority of Kenya (the CAK) published a notice of its intent to carry out a market inquiry into the leasing sector in Kenya (the Leasing Inquiry). The notice, published as Gazette Notice No. 2546 of 2018, indicated that the inquiry would focus on the financial services, agriculture, health, extractives and retail sectors among others. Stakeholders with relevant information regarding Kenya’s leasing sector have until 16th April 2018 to submit oral or written submissions to the CAK.

The purpose of this alert is to inform stakeholders on the nature of market inquiries conducted by the CAK, the obligations of industry participants in relation to such market inquiries and potential consequences that may arise.

Understanding Market Inquiries

Under section 18 of the Competition Act, No. 12 of 2010 (the Act), the CAK has the power to hold inquiries or sector studies on its own accord or under the direction in writing by the Cabinet Secretary for the National Treasury. The CAK has in the past conducted a number of market inquiries across diverse industries, with some illustrated in the table below:

Subject Industry or SectorYear
Artificial insemination and Tea2013
Banking Phase I2014
Banking Phase II2015
Unstructured Supplementary Service Data (USSD) Services2015
Cement (in collaboration with Africa Competition Forum)2015-2016
Branded retail (on going)2017
Liner shipping, Trucking and Haulage (on going)2018

Most importantly, it is key to note that a market inquiry is not an enforcement action or a punitive measure against identified anti-competitive conduct. Instead, a market inquiry is a research project conducted by the CAK to obtain detailed understanding of how the industry in question operates. This involves identification of the relevant participants, the constituent markets of the said industry, mapping out the value chain of that industry and applicable laws and regulations affecting the industry.

The CAK usually conducts the market inquiry by issuing out information requests to industry participants as well as conducting interviews with them. Customers at different points in the value chain may also be engaged so as to attain a comprehensive analysis of the sector. The CAK has a positive duty under section 20 of the Act to maintain confidentiality of information provided, if the provider of such information claims confidentiality.

Importantly, in 2016 the Act was amended to introduce section 18(6) which makes it a mandatory obligation for any person, undertaking or trade association to provide information as requested by the CAK in conducting a market inquiry. Therefore, though the Act does not specify any sanction that may arise from failing to comply with the CAK’s requests, it is possible that such disobedience, if unjustified, would attract some adverse form of regulatory response.

The market inquiry may identify anti-competitive behaviour or the symptoms of such behaviour. Some of the prohibited forms of anti-competitive behaviour include price-fixing, collusive tendering, market division and allocation and minimum resale price maintenance. Market inquiries may also detect unwarranted concentrations of economic power among relevant participants which is evidenced by the existence of cross directorships between distinct undertakings (businesses) whose combined market share is above forty percent (40%).

The outcome of market inquiries varies in nature and extremity. The CAK may prompt investigation into any anti-competitive behaviour if identified, or order market participants to rectify or modify practices that create market inefficiencies and negatively affect consumer welfare. For example, following the USSD market study, CAK ordered mobile network operators (MNOs) to fully publicise transaction costs to customers prior to completion of the transaction. Some MNOs were also compelled to lower the charges levied against mobile money transfers to competing MNOs. The Banking Phase I and II studies also resulted in the CAK recommending increased price transparency and enhanced use of price comparison tools amongst banks.


Ideally, the substantive elements of market inquiries in Kenya should be clarified by regulations enacted under the Act. However, to date, these have not been formulated though the CAK’s 2013/14 – 2016/17) Strategic Plan clarifies that these regulations will be finalised soon.

In the absence of these regulations, it would be ideal for relevant stakeholders to co-operate with the CAK to the extent possible as it conducts the Leasing Inquiry. Where necessary, it is also advisable for stakeholders to claim confidentiality of confidential information to minimize operational risks. Lastly, due to the intricacies of competition law, it may be necessary for stakeholders to retain legal representation to advise on any submissions or other engagements with the CAK so as to safeguard from potential adverse outcomes.

Bernard Musyoka and Mutugi Mutegi