By Joshua Eveleigh
On 29 September 2023, the Competition Authority of Kenya (“CAK”) announced that it will be conducting a market inquiry into the Kenyan animal feeds market (“Animal Feeds Market Inquiry”) to assess the various factors affecting competition in the animal feeds value chain.
The animal feed market is particularly important due to its impact on the pricing of essential food items, such as chicken. In this respect, the recent Essential Food Price Monitoring Report published by the South African Competition Commission found:
“The poultry industry is also the largest consumer of animal feed in the local market. Any shocks in the feed market, therefore, have a tangible and direct effect on broiler and chicken production costs and ultimately prices paid by consumers.”
Provided that there ought to be differences between the South African and Kenyan markets, the economic principles would be largely identical in that the increase of animal feed products would have an adverse impact on farmers and, ultimately, on the consumer welfare as a result of reduced supply and/or increased purchase prices.
In light of the above, the CAK has identified the following objectives of the Animal Feeds Market Inquiry:
- the prices, costs and quantities produced, supplied and purchased at different levels from inputs supply to production and sale of different animal feed products;
- the market shares, concentration, ownership relationships, joint ventures and marketing agreements for the different products and services related to animal feeds and its inputs;
- different terms and conditions of supply for feed producers of different sizes;
- barriers to entry and growth of smaller feed producers;
- information availability, information sources, and any information exchange practices by companies, associations, and other formal or informal groupings relating to animal feed and its inputs;
- arrangements, including licensing and other supply terms, which may affect the sourcing and supply of animal feed including breeding stock and animal feed;
- trade flows of feed constituents, including maize, soybeans and derived products, and what may be affecting the flows from other countries in the Common Market for Eastern and Southern Africa (“COMESA”) and East African Community (“EAC”) regions, taking into account standards, permits, and other requirements in light of the existing trade agreements; and
- the flows of demand and supply of products and services along the value chain for the main animal feed products.
In conducting the market inquiry and to gain an understanding of the above items, the CAK shall arrange and hold meetings and Key Informant Interviews (“KIIs”) and may also receive oral and/oral submissions from industry stakeholders. Importantly, section 18(6) of the Competition Act provides that “every person, undertaking, trade association or body shall be under an obligation to provide information requested by the [CAK] in fulfilment of its statutory mandate for conducting an inquiry.”
Upon the conclusion of a market inquiry by the CAK, its findings shall be used to inform policy considerations. In this respect, however, the policy recommendations of the CAK are non-binding and are handed to the Minister for appropriate legislative action.
Industry stakeholders may submit their oral or written submissions to the CAK by 20 October 2023.
Michael-James Currie, Partner at Primerio, noted: “Market inquiries are powerful investigative tools available to competition authorities and are becoming increasingly utilised across the continent. For instance, South Africa’s Competition Commission has announced its intention to conduct three market inquiries in three separate sectors in 2023 alone. While market inquiries may be disruptive for industry stakeholders, they are undoubtedly necessary for competition authorities to understand the structure, functioning and nuances of particular markets before initiating protracted and complex investigations into allegations of anticompetitive conduct”
