Nairobi — The Competition Authority of Kenya (CAK) has imposed a penalty of Sh85 million on Directline Assurance Company Limited for abusing its bargaining power over two Nairobi-based small motor vehicle repair firms.

The Authority acted after Kilele Motors Limited and Midland Autocare Limited filed complaints alleging that Directline had delayed payments for services rendered, pushing the SMEs into financial distress.

According to CAK, Directline contracted the two garages in 2023 and 2024 to undertake motor vehicle repairs for its insured clients.

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At the conclusion of the investigation, the insurer owed Midland Sh4.7 million and Kilele Sh1.3 million, despite having made partial payments during CAK's intervention.

"The penalties levied are commensurate with the gravity of the offence, as well as the conduct of the accused party during the investigation," said CAK Director General David Kemei.

"Supply contracts between parties to a commercial relationship should be equitable and the product of candid engagements."

The Authority noted that abuse of buyer power manifests in practices such as delayed payments, unilateral contract changes, and shifting undue costs to suppliers.

CAK stated that Directline ignored at least 19 formal reminders to settle the outstanding invoices and failed to provide timely updates, amounting to Abuse of Buyer Power (ABP).

In addition to the fines, Directline has been ordered to clear all outstanding payments, revise its supply contracts to include interest on late payments, and refrain from conduct that violates the Competition Act.

CAK said the ruling is intended to serve as a deterrent to businesses that exploit their market position at the expense of smaller suppliers.