•Toward the end of April this year, the authority requested 25 major retailers from across the country to submit their debt portfolios outstanding for over 90 days.
•Tuskys is among four retailers that were found to have delayed payments exceeding the stipulated 90 days.
Tuskys failure to present a payment plan or evidence of negotiations with affected suppliers led to a probe into it's accounts, the Competition Authority of Kenya (CAK) said yesterday.
The authority said the current ‘Abuse of Buyer Power’ provisions gives it the muscle to deal with the delayed payment of suppliers by the retailer.
Tuskys is among four retailers that were found to have delayed payments exceeding the stipulated 90 days in a probe by CAK.
Toward the end of April this year, the authority requested 25 major retailers from across the country to submit their debt portfolios outstanding for over 90 days.
Out of the 25 retailers, only four retailers were found to have delayed payments exceeding 90 days.
Three of the four retailers presented payment plans and have continuously reduced their debt portfolio, aiming to settle the outstanding amounts within the next 60 days, CAK director-general Wang'ombe Kariuki told the Star.
“The authority has issued prudential and reporting orders to one retailer (Tuskys) who, after several requests and extensions, failed to present a payment plan or evidence of negotiations with the affected suppliers,” Wang’ombe said in an email response.
He said the authority will conduct compliance checks on the other three which committed to clear monies owed to suppliers after 60 days from date of the agreement.
CAK said analysis of the information and documents presented to it indicates that the vast majority of retail supermarkets are paying their local suppliers on time.
The competition watchdog has however avoided delving into specific details of Tuskys case saying investigations are ongoing.
However, it is understood that it has ordered Tuskys to settle Sh1.29 billion owed to suppliers by between July 1 and July 16.
In May, Tuskys informed the regulator that it owed suppliers a total of Sh884.3 million, which was later revised downwards without proof of payment.
The regulator however established the retailer had failed to disclose some Sh400.9 million owed to suppliers.
Tuskys is to settle Sh396.2 million owed to suppliers of fast-moving consumer goods within 14 days from June 16, 2020, Sh499.1 million owed to non- fast-moving consumer goods within 30 days and the Sh400.9 million supplier debt, to be settled in full within 14 days from Tuesday.
The retailer in April closed three branches-Tom Mboya (Nairobi), Kitale Mega, and Digo Road (Mombasa) due to reduced customers in the wake of Covid-19, as the economy reels from effects of the virus.
CAK however on Wednesday said no retailer has tendered any documents to indicating that their current status has been occasioned by the Covid-19 pandemic.
“The documents under the custody of the authority indicate that most of the outstanding payments date back pre Covid-19,” Wangombe told the Star.
Investigations on Tuskys are pegged on abuse of buyer power in the form of delays in payment of suppliers contrary to sections 24A(1) and 24A(5)(a) of the Act.
Section 24 (2D) of the Act defines "buyer power" as the influence exerted by an undertaking or group of undertakings in the position of a purchaser of a product or service to obtain from a supplier more favourable terms.
Or to impose a long term opportunity cost including harm or withheld benefit which, if carried out, would be significantly disproportionate to any resulting long term cost to the undertaking or group of undertakings.
“Any person who contravenes the provisions of this section commits an offence and shall be liable on conviction to imprisonment for a term not exceeding five years or to a fine not exceeding ten million shillings or to both,” the law stipulates.
Recent woes at Tuskys, including shortage on supplies in recent times, is likened to Nakumatt which went under with more than Sh30 billion, including Sh18 billion owed to suppliers.
Tuskys management has remained mum over developments at the retailer even as it went into crisis meetings.
“Management will give feedback by end of the week,” an official told the Star.
Meanwhile, CAK is keen to invoke the law to punish the retailer if it fails to meet its debt obligation.
“The current abuse of buyer power provisions, as donated by Parliament in January 2020, are adequate to deal with the issues at hand, unless we encounter other emerging issues in our ever-evolving markets,” Wangombe said.