A number of exchange companies who may have violated the Competition Protection law have been summoned for interrogation by the Authority,, against the background of allegations that they have concluded a collective agreement to unify the prices of remittances according to rates agreed upon daily, and this includes the exchange rate margin of their converted currencies.
A local Arabic daily quoting reliable sources from the Competition Protection Authority said it constitutes a violation of the provisions of the device law and that if the violations against them are proven, they will face penalties in accordance with the law, starting with a warning, and up to a fine of 10 percent of their profits achieved throughout the implementation period of their agreement.
It is reported, according to the open investigation in this regard, that 12 exchange companies have resorted, since the start of the repercussions of the Corona pandemic, to regulate competition between them, with an amicable understanding contract that requires the implementation of their transfers at a unified price, and this includes the exchange rate of currencies transferred in their operations, with the aim of getting rid of unhealthy competition, which sometimes reached offering prices devour returns.
This agreement obligates all its members to set the price on a daily basis, without allowing any reduction in value, regardless of the weight of the customer, the size of his transfers and his history with the company.
Sources close to the exchange companies pointed out that their understanding in this regard does not contradict the “Competition Protection” law for more than one reason, noting that the two ‘mutualists’ are 12 companies, while there are about 200 companies and exchange institutions that did not participate in this agreement, as they decided to work alone by determining its profit margin from remittances, and while doing so, it provided lower price levels than those traded with counterparty companies.
She stated that about 35 companies are working in the local exchange market, subject to the supervision of the Central Bank of Kuwait, not all of them agreed on this understanding, which shows that the agreement is not binding.
It is noteworthy that the exchange companies sector achieved net profits from January until the end of last March about 13.39 million dinars, an increase of 37 percent compared to the same period in 2021.
Although the information received by the CPA indicates that the exchange companies concerned with the agreement broke their price link before they were summoned for the investigation, as its officials indicated that they were not aware that their position in this regard is against the law, and one of the reasons for this is the newness of the work of the agency, and the lack of awareness of its supervisory role among all sectors.
CPA officials argue that it is generally not allowed to agree on specific prices that companies impose on consumers, regardless of their activity, in accordance with the provisions of the Agency’s Law, which aim to ensure that there is fair competition between companies.
Sources told the daily the companies’ agreement on a specific price and imposing it on the consumer is a violation of the competition law, stressing at the same time that the main goal is to protect competition, and companies to compete, not punish them.
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