An acute sugar shortage in the domestic market and the resulting surge in retail prices have put Nakumatt Supermarkets in the eye of regulators who have launched investigations into the retail chain’s dealings in the sweetener.
The Sugar Directorate, yesterday fired a letter to Nakumatt, accusing it of hoarding and rationing sugar to create an artificial shortage in order to increase prices.
The agency, which is the sector regulator, says in a letter to Nakumatt that the retailer is using its dominant position in the market to earn ‘‘unjustified abnormal profits’’ from sugar.
“It has come to our attention that Nakumatt supermarket through its retail outlets is engaging in unfair trade practices by way of hoarding and rationing distribution of sugar,” the letter says.
“The supermarket is exposing consumers to unjustifiable cost of acquiring sugar, limiting the distribution of the commodity and negating the spirit of effective competition in the market.”
A kilogramme of sugar is now retailing at Sh145 at Nakumatt, up from Sh125 two months ago on account of an acute shortage that the regulators now say does not exist.
At Sh145 per kilo, Nakumatt is the most expensive supermarket to buy sugar from compared to competitors such as Tuskys and Naivas, which are selling the same commodity at Sh135 per kilo.
The Competition Authority of Kenya (CAK) entered the fray with the launch of investigations into the alleged uncompetitive market behaviour.
The Sugar Directorate had requested the competition watchdog to investigate the retail chain for anti-competitive behaviour.
CAK director- general Kariuki Wang’ombe said that there were elements of market distortion in the sugar affair and on which action will be taken once investigations are complete.
“We have received complaints from the regulator. We are carrying out investigations in the next three days before offering a verdict. The allegations referred to by the directorate amount to market distortion,” said Mr Wang’ombe.
A consumer lobby group accused the supermarket of using the artificial sugar shortage it has created to cause panic buying whose impact is to drive up retail prices.
“I am not certain on the amount of stocks in the country, but if the regulator says we have enough, then the only conclusion we can reach is that some hoarding has taken place to create panic buying, leading to even higher prices,” said Stephen Mutoro, the secretary- general of Consumer Federation of Kenya.
Mr Mutoro said it was unfair for Nakumatt to ration sugar and force their loyal customers to buy the commodity at exorbitant prices.
Nakumatt has been rationing sugar in its shops, restricting customers to a maximum one two- kilogramme packet.
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Credit: Business Daily