Group to probe edible oil sector over high prices

The antitrust watchdog is raising the red flag on the country’s edible oil industry, setting the stage for investigations into the conduct of various players that may be impeding competition.

Last week, Competition Authority of Kenya (CAK) director general Wang’ombe Kariuki said retail prices in the sector were not responsive to global producer prices despite heavy reliance on imports by manufacturers.

Studying data collected by  the Kenya National Bureau of Statistics, CAK found that the average retail prices of edible oils rose even when international prices for raw materials were declining.
“This does not mean there are cartels in the sector but it gives you more motivation to look at the sector for evidence of cartelisation,” said Mr Kariuki.

Comparison with American edible oil prices, with adjustments made for exchange rates, have also shown that Kenyan prices are “significantly higher” by a margin that is “quite scary”.

However, it is important to note that these comparisons may not paint an accurate picture, given that the authority has not been able to compare like for like — it has compared Kenyan retail prices with bulk prices in the United States.

Mr Kariuki was speaking during a media training forum in Naivasha on Friday, where he outlined focus areas for the authority in coming years. In addition to prioritising investigations into the sector, the authority is also looking into competition practises in agriculture, cement, air transport and telecommunications industries.

In the financial year 2012/2013, CAK carried out investigations into 17 restrictive trade practices, majority of which were in manufacturing, transport and telecommunications sectors.

Jointly, these accounted for 60 per cent of all investigations. Media and agriculture each accounted for 15 per cent of the investigations.

Market share

Bidco Oil Refineries is the largest player in Kenya’s edible oil sector. Estimations by Consumer Insight Africa indicate that the company controls at least 54 per cent of the cooking oil market and 61 per cent of the cooking fat market.

On the other hand, Euromonitor estimates Bidco’s share of the edible oils and fats market at 56 per cent.

“Bidco remains on top because its brands are of good quality, affordable to both low and upper income earners, and it has a good distribution network,” said Euromonitor in its April 2014 report.

The firm owns the Elianto and Golden Fry brands. Other large players in the market include Kapa Oil Refineries, which manufactures Rina Vegetable Oil, and Pwani Oils which sells the Fresh Fri and Popco brands.

Today, the CAK is holding a workshop with business associations in the country to sensitise them on activities that can be construed as impeding fair competition.