The Competition Authority of Kenya (CAK) has fined Directline Assurance Company Limited a total of Sh85 million for abusing its buyer power over two Nairobi-based small businesses, Kilele Motors and Midland Autocare.
The Authority found that the insurer repeatedly delayed payments to the garages for motor vehicle repairs they had completed under contract in 2023 and 2024. Despite at least 19 formal reminders from the Authority, including letters, emails, and phone calls, Directline failed to settle the bills in full or provide updates on the delays.
Buyer power is defined under Kenya’s Competition Act as the ability of a large or influential buyer to demand unfairly favorable terms, often harming smaller suppliers. Abuses include delaying payments, reducing prices unfairly, transferring costs or risks to suppliers, or threatening to terminate contracts without reason.
Kilele Motors and Midland Autocare provide services such as panel beating, spray painting, and mechanical repairs. In May 2024, they filed complaints with CAK after Directline failed to honor invoices totaling Sh7.6 million and Sh5 million, respectively. While the insurer later made partial payments, Sh1.3 million remained owed to Kilele and Sh4.7 million to Midland.
Directline told the Authority that temporary inaccessibility of its bank accounts caused the delays and claimed it was making progress in settling the amounts. However, the firm did not respond promptly to the Authority’s repeated communications.
As part of the ruling, CAK has ordered Directline to pay all outstanding invoices and revise its supply contracts to include interest on late payments, as required by law. The insurer has also been directed to stop engaging in any conduct that violates the Competition Act.
CAK Director-General David Kemei said the fines serve as a warning to other companies that might misuse their bargaining power.
“Abuse of buyer power cripples small businesses and undermines Kenya’s goal of inclusive economic growth,” he said. “SMEs rely on timely payments to meet obligations and grow their businesses. Delays can destroy enterprises and cost jobs.”
Directline, which has 24 branches across the country, offers a range of insurance services, including motor vehicle insurance.
