The action by the steel companies heavily increased the cost of constructing homes and infrastructure across the country.
The Competition Authority of Kenya (CAK), in an effort to preserve market competition and thwart anti-competitive practices, has imposed a fine of Sh338,849,427 million on nine steel manufacturers for their involvement in cartel behaviour that inflated the prices of steel products.
In a statement issued on Wednesday (August 23), CAK said its action follows a rigorous investigation that uncovered the collusion among steel firms, a practice that substantially augmented the cost of constructing residential and infrastructure projects by inflating steel product prices.
The penalized companies are Nail and Steel Products Limited, Brollo Kenya Limited, Blue Nile Wire Products Limited, Tononoka Rolling Mills Limited, Devki Steel Mills, Doshi and Hardware Limited, Corrugated Steel Limited, Jumbo Steel Mills, and Accurate Steel Mills Limited. These entities were found to be complicit in price fixing by collectively agreeing to set prices and price adjustment timelines, thereby inhibiting market competition.
“The companies engaged in cartel conduct whose effect was to increase the cost of construction of homes and infrastructure by artificially inflating the cost of steel products,” CAK said.
“Price fixing and output restriction are illegal under the Competition Act since they hinder competition in markets… competition markets benefit consumers through lower prices, increased choice, and quality of goods and services.”
The agency added that except for Accurate Steel Mills Limited, the 8 other companies are guilty of output restriction. In its explanation CAK maintained that by engaging in a practice that artificially curtailed the importation of specific steel components, these firms created an artificial shortage, driving prices higher. This dual-pronged strategy led to an unwarranted escalation of steel product costs, constituting a breach of the Competition Act.
Dr Adano Wario, the Acting Director-General of the Authority, emphasized that the penalty’s magnitude is commensurate with the harm inflicted on consumers who have been grappling with exorbitant steel product costs. He underscored the role of this penalty in reestablishing fair competition within the sector and discouraging companies from deploying anti-competitive tactics for business gains.
“In this matter, the steel firms illegally colluded on prices and margins as well as output strategies,” said Wario, who added that the penalty, the highest-ever imposed by CAK, should send a strong message to cartels.
“It should send a clear message that cartel conduct is illegal under the Competition Act,” he said.
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