CAK BLAMED

Senators wade into EABL, Keroche beer bottle row

Company accused of unfair competitive practices

In Summary

•Nominated senator Petronilla Were asked the House to investigate whether EABL’s move to engrave the bottles with its trademark contravened competitions Act.

• EABL through its Kenyan chapter – Kenya Breweries Limited (KBL) has been  accused by players in the industry for its uncompetitive conduct in the packaging of beers.

EABL managing director Andrew Cowan, chairman Charles Muchene and NSE CEO Geoffrey Odundo.
EABL managing director Andrew Cowan, chairman Charles Muchene and NSE CEO Geoffrey Odundo.
Image: ENOS TECHE

Senators have launched investigations into what they termed monopolistic tendencies by East Africa Breweries Limited in beer packaging.

The lawmakers said EABL uses its dominant position in the market to engage in restrictive trade practices.

They claimed that the brewer has engraved the universal euro brown design beer bottles with the EABL initials, thus limiting access to beer bottles by its competitors.

 

Nominated Senator Petronilla Were asked the House to investigate whether EABL’s move to engrave the bottles with its trademark violated the Competition Act.

She sought a statement from the House committee on the monopolistic tendencies of the company.

“The committee should state measures, if any, put in place by the government to ensure EABL does not continue abusing its dominant position in the market to perpetuate anticompetitive practices against other players,” the senator said.

EABL through its Kenyan chapter – Kenya Breweries Limited (KBL) has been  accused by players in the industry for its uncompetitive conduct in the packaging of beers.

Senators Getrude Musuruve (nominated), Samson Cherargei (Nandi), Okong'o Omogeni (Nyamira), Irungu Kang'ata (Murang'a) and Hargura Godana (Marsabit) turned the heat on the Competitions Authority of Kenya (CAK).

They claimed that the regulator has allegedly turned a deaf ear to the plight of other small players in the market.

“The problem we have in this country is not even the EABL, which is becoming rogue and monopolistic. The problem is that we have an agency called CAK which is just grossly incompetent, chronically ineffective and moribund,” Cherargei said.

 

Citing monopolies in other industries such as telecommunication, the vocal senator claimed that companies like EABL were using their dominance to micromanage and remote-control CAK to allow them to override other companies that are making beer.

“The CAK has left Kenyans at the mercy of these monopolistic companies. You find EABL can dictate how the market for beer in this country can be run, yet the CAK should be protecting Kenyans. Are we at their mercy?” he asked.

Kang'ata said it was unfair for the CAK to go silent on complaints about EABL’s conduct, yet it controls 90 per cent of the market.

“First, the EABL is the one that dictates the price of beer in this country. Secondly, no new company can establish itself and employment cannot be created. The worst case scenario is that the EABL is owned by a foreigner,” he said.

But in a comprehensive statement to the Senate Trade committee on Monday, CAK director general Wang’ombe Kariuki said the authority has launched investigation into the conduct of EABL.

This was after it received complaints from Bunge La Mwananchi and Keroche Breweries Limited on diverse dates, alleging that EABL was unjustifiably embossing the Euro brown beer bottle and was threatening to take legal action against anyone using EABL branded bottles to package other beers.

The authority said that although it carried out investigations and established that EALB violated sections of the Competition Act, it was unable to make conclusive findings because of two cases pending in court.

“…. no determination was made on the same because of the pending court matters. As such, before the conclusion of the investigations, it is speculative to say whether or not EABL’s conduct amounts to a contravention of the Act,” Kariuki said.

The cases Civil Case No E471 of 2019 Alexander Mugo Mtetu and five others vs Kenya Breweries Limited, CAK and three others and HCC No 88 of 2016 KBL and EABL vs Keroche and three others for which the euro brown beer bottle was subject, were before the High Court.

“In light of this, and guided by the provisions of Rule 34 (5) (a) of the Competition (General) Rules, 2019, the authority decided to hold the matter in abeyance pending the determination of the same by the High Court…” Kariuki said.