The Competition Authority of Kenya (CAK) has fined Directline Assurance Company KSh 85 million.
The penalty comes after the insurer was found misusing its buyer power against two Nairobi garages.
The garages provide services such as panel beating, spray painting and mechanical repairs.
They were contracted by Directline in 2023 and 2024 to fix vehicles insured by the company. Despite completing the work, the garages were not paid on time.In May 2024, the garages complained to CAK.
They said Directline had delayed payments, leaving their businesses in financial trouble.
The garages submitted invoices, authorisation letters, and correspondence as proof.CAK investigated the matter. The authority confirmed that Directline held superior bargaining power.
The insurer had misused this power to delay payments.
At the time of the complaints, Directline owed one garage KSh 7.6 million and the other KSh 5 million.
After partial settlements, KSh 4.7 million and KSh 1.3 million remained unpaid.Directline explained the delays, citing temporary bank account issues.
But the company failed to respond to at least nineteen formal reminders from CAK.It also ignored requests for updates on the outstanding payments.
As a result, CAK fined Directline KSh 42.5 million for each count of abuse. The insurer was also ordered to pay the remaining invoices in full.
In addition, CAK directed the company to amend its supply contracts. They must now include interest for late payments.CAK Director-General said the penalties match the gravity of the offence. He emphasized that misuse of buyer power can destroy small businesses and lead to job losses.
He also urged businesses to create fair and transparent contracts.
This ruling highlights the challenges faced by small and medium enterprises (SMEs) in Kenya.
Many rely on prompt payments to survive. Delayed payments from large companies can cripple operations.
It is not yet clear if Directline will appeal the decision or comply fully. The insurer has faced internal ownership disputes in recent years.
The KSh 85 million fine sends a strong message to large companies. It shows that abusing market power will not be tolerated.
CAK said it will continue monitoring businesses to protect smaller suppliers.
