The Competition Authority of Kenya, established under the Competition Act No.12 of 2010, has taken significant action against nine steel manufacturers following an investigation into anti-competitive conduct. The move comes in response to findings of fraudulent behavior among these companies, resulting in deliberately inflated steel prices that have had a substantial impact on construction costs for both homes and infrastructure.
Dr. Adano Wario, the Acting Director-General of the Authority, has emphasized the importance of enforcing the Competition Act to protect the interests of Kenyan citizens. The penalties imposed on the steel manufacturers amount to Ksh338,849,427.89, representing the highest-ever fines imposed by the Authority. The penalties have been set according to the severity of the offenses and the adverse effects experienced by consumers who have long borne the burden of high steel product costs.
The Competition Act categorizes price fixing and output restriction as anti-competitive behaviors that disrupt the normal functioning of a free market. These practices undermine fair competition, leaving consumers with fewer choices, higher prices, and potentially lower quality goods and services. Additionally, such practices discourage innovation among competitors.
The penalized steel manufacturers, including companies such as Nail and Steel Products Limited, Brollo Kenya Limited, Blue Nile Wire Products Limited, Tononoka Rolling Mills Limited, Devki Steel Mills, Doshi & Hardware Limited, Corrugated Steel Limited, Jumbo Steel Mills, and Accurate Steel Mills Limited, have been found to have violated the Act by unlawfully agreeing on prices, coordinating price adjustment timelines, and imposing limits on imports of specific steel components, which led to an artificial scarcity that further propelled prices upward.
The penalties imposed on these companies highlight the severe consequences of participating in anti-competitive practices. Dr. Wario emphasized that cartels prioritize their own commercial interests at the expense of consumers, leading to economic harm. In a broad market like Kenya’s, the pricing mechanism should be determined by the forces of supply and demand, free from manipulative practices.
Read Also: President Ruto’s Plan to Lease Management of Five Ports
As part of its commitment to restoring fair competition, the Authority is currently engaged in settlement negotiations with five additional steel firms. These negotiations, guided by section 38 of the Competition Act, seek to achieve swift and cost-effective resolutions, restoring competition within the sector. The outcomes of these negotiations are expected to be publicly disclosed through the Kenya Gazette.
The Authority’s intervention in the steel sector aligns with its broader mission of fostering competitive markets within the construction industry, in support of the Kenyan government’s initiatives, including the provision of affordable housing for citizens. This intervention follows the Authority’s past involvement in other related sectors, such as cement and paint manufacturing.
The investigation into the steel sector commenced in August 2020, triggered by intelligence obtained from a covert field screening conducted by the Authority. further actions, including a search and seizure operation in December 2021, resulted in the acquisition of electronic and physical evidence.
After a thorough review process and hearings, the Authority found compelling evidence of collusion, including meeting minutes, coordinated pricing releases, monitoring of competitors’ activities, and discussions regarding the manipulation of raw material imports.
The penalties levied, which vary based on factors such as company turnover, violation duration, and cooperation during the investigation, indicates the Authority’s commitment to promoting fair competition.
The Authority further encourages the public to report credible information regarding anti-competitive practices through the Informant Reward Scheme. Firms that voluntarily disclose prohibited practices via the Leniency Programme may also receive reduced fines.
Penalties Imposed on Steel Manufacturers:
Corrugated Steel Ltd. – Ksh86,979,378.53
Tononoka Rolling Mills Ltd. – Ksh62,715,074.03
Devki Steel Mills Ltd. – Ksh46,296,011.25
Doshi & Hardware Ltd. – Ksh41,554,290.58
Jumbo Steel Mills Ltd. – Ksh33,140,459.40
Accurate Steel Mills Ltd. – Ksh26,826,344.31
Nail and Steel Products Ltd. – Ksh22,816,546.01
Brollo Kenya Ltd. – Ksh9,360,429.48
Blue Nile Wire Products Ltd. – Ksh9,160,894.30
Total Penalties: Ksh338,849,427.89
Subscribe to Switch TV for more exciting content
