By John Mutiso
The Competition Authority of Kenya (CAK) has fined Directline Assurance Ksh85,019,847 for abuse of buyer power over Kilele Motors and Midland Autocare car repair shops.
In a statement on Wednesday, December 3, CAK said it issued the fine to Directline after the two repair shops lodged separate complaints in 2024, alleging that the insurer had failed to honor its invoices despite satisfactorily undertaking several repair assignments.
The two firms supplied the authority with information to support their allegations, including authorization letters, re-inspection reports, invoices, release letters, customer satisfaction notes and correspondence between the parties regarding the pending payments.
According to CAK, Kilele and Midland were contracted by Directline in 2023 and 2024 as motor vehicle repairers.
“Specifically, Directline owed Midland and Kilele Ksh7,616,456 and Ksh5,038,094, respectively, at the time they lodged complaints. Following the Authority’s intervention in the course of investigations, the insurer partly settled the outstanding invoices, leaving a balance of Ksh 1,343,331.00 owed to Kilele and Ksh4,719,904 to Midland,” read the statement in part.
CAK noted that the delays in settling the balances put the two firms in a precarious financial position, rendering them unable to honor their obligations to suppliers, employees, and landlords.
The authority mentioned that it made the decision to fine Directline after it was granted several opportunities to respond to the allegations but ignored 19 reminders.
CAK penalized Directline Ksh85,019,847.32 and directed it to settle the outstanding balance of Ksh6,063,235 owed to Kilele and Midland.
“In enforcing this mandate, the Authority has penalized Directline Assurance Company Limited (Directline) a total of KES 85,019,847.32 for abusing its superior bargaining position over two Nairobi-based automobile repair centers.
“Directline has also been ordered to settle the outstanding delayed payments totaling KES 6,063,235 to the two companies,” CAK stated.
Further, the authority ordered Directline to amend its supply contracts to comply with the provisions of section 24A (7) of the Competition Act, specifically, by providing for interest payable on late payments.
In addition, CAK directed the insurer to desist from engaging in conduct that violates the Competition Act.
“Abuse of buyer power, which cripples suppliers, defeats the country’s aspiration of promoting inclusive economic development. SMEs are liquidity-constrained enterprises. Therefore, failure to honor payments for work done can destroy a business and render thousands jobless,” CAK Director General David Kemei stated.
