The Competition Authority of Kenya (CAK) has fined nine steel manufacturers Ksh338.84 million for inflating steel prices in the country.
This is after CAK conducted investigations and established the nine firms engaged in cartel conduct to increase the cost of homes and infrastructure, as steel products such as metal bars, pipes, beams and sheets account for over 20 per cent of the total cost of house construction.
Among the companies penalized are Devki Steel Mills, Doshi & Hardware Limited, Tononoka Rolling Mills Limited, Nail and Steel Products Limited and Brollo Kenya Limited.
Jumbo Steel Mills, Corrugated Steel Limited, Blue Nile Wire Products Limited and Accurate Steel Mills Limited were also penalized for engaging in price fixing.
In addition to inflating the price of steel products, all the above-mentioned companies but Accurate Steel Mills have also been penalized for output restriction as they caused an artificial shortage of certain steel components by limiting imports.
Corrugated Steel Ltd. was slapped with a penalty of Ksh86.97 Million, Tononoka Rolling Mills Ltd. Ksh62.71 Million, Devki Steel Mills Ltd. Ksh46.29 Million, Doshi & Hardware Ltd. Ksh41.55 Million and Jumbo Steel Mills Ltd. Ksh33.14 Million.
Accurate Steel Mills Ltd, Nail and Steel Products Ltd, Brollo Kenya Ltd, and Blue Nile Wire Products Ltd were fined Ksh.26.82 Million, Ksh22.81 Million, Ksh9.36 Million and Ksh9.16 Million respectively.
Under the Competition Act, price fixing and output restriction are illegal practices as they hinder competition in the market.
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CAK’s acting Director-General Adano Wario noted that the penalties measure to the offense as consumers have been decrying the high cost of steel products in the country.
“Cartels are conceived, executed, and enforced by businesses to serve their commercial interests, and to the
economic harm of consumers. In this matter, the steel firms illegally colluded on prices and margins as well
as output strategies,” said Wario.
“This penalty is the highest-ever imposed by the Authority and it should send a clear message that cartel conduct is illegal under the Competition Act,” added CAK’s Director-General.
Wario reiterated that the penalties are meant to restore competition in the sector and deter companies from deploying anti-competitive practices.
In 2021, the CAK penalized four paint manufacturers a total of Ksh66 Million for cartel conduct, including price fixing.
Investigations into the steel sector kicked off in August 2020 and intelligence CAK gathered from the exercise pointed to coordinated conduct by manufacturers, specifically on pricing and output restriction.