16 exchange firms hit with hefty fines for currency rate fixing

• Agreements to unify prices are considered monopolistic practices that undermine the freedom to conduct economic activities and disrupt fair competition in the markets.

•  The revenues of 32 exchange companies operating in Kuwaiti under the supervision of the Central Bank of Kuwait amounted to about KD 80.15 million in 2023.

• The alliances between exchange companies aimed at unifying foreign currency prices resulted in price fixing, which contravenes the standards set by the “Competition Protection” Law.

The Disciplinary Board of the Competition Protection Authority has imposed substantial financial penalties on about 16 out of 20 exchange companies accused of violating a monopoly agreement to unify foreign currency exchange rates, informed sources revealed to Al-Rai newspaper.

The authority and the Disciplinary Board viewed this agreement as an alliance detrimental to healthy competition, its laws, and its executive regulations.

The sources reported that the financial fines imposed on the affected companies ranged between one, three, and five percent of their total revenues achieved in their financial budget prior to the violation recorded between the fiscal years 2020 and 2022.

They indicated that the penalty was based on the fact that the affected companies had circumvented the fixing of foreign exchange rates and that the fixing continued for a period by agreement.

It is worth noting that the revenues of 32 exchange companies operating in the Kuwaiti market under the supervision of the Central Bank of Kuwait amounted to about KD 80.15 million in 2023. This includes KD 60.3 million from selling currencies, KD 18.87 million from other revenues, and KD 972.5 thousand from bank interest. These companies recorded net profits of KD 43.08 million last year. Additionally, there are about 105 banking institutions under the supervision of the Ministry of Commerce and Industry.

The sources indicated that the penalties approved by the Disciplinary Board followed an investigation by the Authority into the practices of these companies. The investigation revealed violations of Chapter Two, “Practices Harmful to Competition,” Article (5), which “prohibits agreements or actions related to horizontal relationships, including indirectly determining product prices through raising, lowering, or fixing them.”

The sources added that alliances between exchange companies aimed at unifying foreign currency prices resulted in price fixing, which contravenes the standards set by the “Competition Protection” Law. This law prohibits any agreements to unify prices, whether through fixing, raising, or lowering them.

The sources pointed out that the investigations concluded the violating exchange companies engaged in activities that hindered healthy competition. These actions led to harmful practices affecting the quality of service and products, violating the governing body’s policy on market monitoring and various commercial sectors.

The sources also indicated that agreements to unify prices are considered monopolistic practices that undermine the freedom to conduct economic activities and disrupt fair competition in the markets.