Kenya revenue authority (KRA) plan to fix the maximum price of alcohol has received opposition from competition regulator saying that the taxman’s order is illegal.
Distillers have been ordered by KRA not to sell alcoholic spirits below Ksh150 for 250 millilitre containers, and those who fail to follow the order are tax cheats and that production expenses and duty cost do not permit alcohol to be sold below the KRA price.
This is forcing manufacturers of drinks targeted at the low-end market to increase their prices.
The Competition Authority of Kenya (CAK) has however sought clarity over the KRA order, pointing out that it could breach sections of the antitrust law that bars the setting of binding prices.
Distillers have been warned against selling spirits below Ksh150 which will attract punishment that includes withdrawing their operating licences and impounding their products
A seven day notice for compliance with the minimum price order has been issued by KRA.
The rising cost of beer and spirits has pushed cash-strapped Kenyans to cheaper alcohol, including some that are considered illicit drinks.
KRA says setting of the minimum spirits prices will “level the playing field” for dealers, arguing that cheap liquor has disadvantaged some players like EABL in a market where price is a market share driver, especially in the low income segment.
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