This archive report was first published on 19 June 2020.
Tuskys Under Scrutiny as CAK Probes Buyer Power Abuse ¶
Published on June 19, 2020
The Competition Authority of Kenya (CAK) is investigating Tuskys and three other retailers for potential buyer power abuse, with the regulator confirming that most retailers have complied with prompt payment rules.
According to CAK Director General Wang'ombe Kariuki, out of 25 retailers investigated, only four 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.
However, one retailer failed to present a payment plan or evidence of negotiations with affected suppliers, prompting the CAK to issue prudential and reporting orders.
The probe comes as Tuskys faces allegations of violating supplier payments, with the retailer's management remaining silent on the matter. In a letter to the Kenya Association of Manufacturers (KAM), Tuskys CEO Daniel Githua admitted to late payments, blaming the Covid-19 pandemic for the issue.
However, the CAK has argued that none of the retailers have pinned ongoing woes to the pandemic, with most outstanding payments dating back pre-Covid-19.
The regulator's findings have drawn a sense of déjà vu to suppliers who lost billions to the now-defunct Nakumatt, with the CEO of the Suppliers Association of Kenya, Ishmael Bett, warning that the collapse of another major retailer could have devastating consequences for suppliers.
As the CAK continues its probe, the retailer's woes have led to calls for a review of the voluntary memorandum of understanding (MOU) signed between suppliers and retailers in January 2019. The government is reviewing the efficiency of the codes implementation, with Trade Cabinet Secretary Betty Maina stating that the government is looking at the efficacy of the code as there is a view on the need to pursue a much stronger and more enforceable pact.
