Competition Authority of Kenya (CAK) has fined nine steel companies a total of Ksh338.9 million for illegally hiking the prices of steel products.
According to CAK, the nine companies engaged in cartel-like behavior leading to a steep increase in the prices of steel products accounting for more than 20% of the total cost of house construction in the country.
Some of the steel products whose costs have gone unfairly high include bars, pipes, beams, and sheets.
Moreover, the regulator noted that the companies contravened Competition Act No. 12 of the 2010 constitution.
The 9 Embattled Companies and Fines Imposed
- Corrugated Steel Ltd (Sh86.97 million)
- Tononoka Rolling Mills Ltd (Sh62.72 million)
- Devki Steel Mills Ltd (Sh46.3 million)
- Doshi and Hardware Ltd (Sh41.6 million)
- Jumbo Steels Mill Ltd (Sh33.14 million)
- Accurate Steel Mills Ltd (Sh26.83 million)
- Nail and Steel Products Ltd (Sh22.82 million)
- Brollo Kenya Ltd (Sh9.4 million)
- Blue Nile Wire Products Ltd (Sh9.16 million)
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Nevertheless, CAK acting Director General Adano Wario stated that the above fines are proportional to the offence, particularly for consumers who have raised complaints over the high cost of steel products in the country.
He highlighted that the penalties are meant to restore competition in the sector and prevent companies from adopting anti-competitive practices as a business strategy.
“Cartels are conceived, executed, and enforced by businesses to serve their commercial interests, and to the economic harm of consumers,” Wario said.
“In this matter, the steel firms illegally colluded on prices and margins as well as output strategies,” he added.
The competition regulator reported that it first investigated the matter in August 2020 and conducted a nationwide covert field screening.
The results accrued pointed out a coordinated effort by manufacturers on pricing and output restrictions.
“The companies were found to be in violation of the competition law, the two parameters that were in that line are restrictive trade practices with regards to importation of steel products and raw materials, the other is restriction of output locally with the aim of increasing prices.” Wario said.
Likewise, CAK found that steel firms resolved to restrict importation of 0.9mm coils and plates, coordinate the release of pricelist through ex-factory prices, monitor competitors stock levels, and monitor sales volume, among others.
The regulator reported that they gathered evidence in documents and electronics which helped in doing further analysis.
They further conducted interviews based on the evidence gathered from the searches.