Brokers have suffered a blow after the competition watchdog rejected a request by the East African Tea Traders Association (EATTA) to be exempted from the price fixing law.
The Competition Authority of Kenya (CAK) said the current practice of setting brokerage commissions and warehouse prices at the tea auction in Mombasa is a “hardcore contravention” of the law.
The CAK also said the lobby did not provide sufficient justification that the setting of these prices would have a public benefit that outweighs the negative impact on competition in the sector.
“The setting of brokerage fees was beneficial to the brokers with no express benefits to consumers and tea producers,” said CAK in its statement.
It argued that setting prices, especially for warehousing, discourages competition and innovation because there was no incentive to improve the services provided to customers.
Further, the authority argued that the prices charged in Kenya were higher than those of Sri Lanka and India and had stagnated “for a long period of time”.