CAK raids fertiliser firms Mea, Yara over price fixing

The Competition Authority of Kenya (CAK) Monday raided two fertiliser firms on suspicion of engaging in price fixing.

The CAK stormed Nakuru-based Mea Limited and the Yara East Africa, a subsidiary of Yara International, in search of documents to help unravel alleged uncompetitive practices between the two firms—who control about 60 per cent of the fertiliser market.

“My officers’ exercised section 32 of the Competition Act which allows us to search business premises,” said CAK director-general Kariuki Wang’ombe told the Business Daily without giving details on fears that it could hurt the investigations.

Sources at the competition watchdog said they suspect price collusion between the two firms and the watchdog was seeking board reports, presentations, pricing data and circulars to detect other breaches.

The list of practices regarded as illegal includes recommending pricing formulas and terms of sales such as discount, credit, transport and delivery costs as well as sales and production volumes to influence the market.

Others are use of rules agreed upon by players in a sector to establish prices, restrict advertising or exclude competitors from the market.

Entering into agreements which divide customers or geographic regions for coverage among players or members of a business association is also considered illegal.

Mea and the Yara are member of the Fertiliser Association of Kenya (FAK). Mea managing director Eustace Muriuki has for years been the chairman of FAK.

Full benefits

The competition watchdog last year launched an inquiry into the conduct of powerful trade associations with cartel-like behaviours to weed out practices that have denied consumers full benefits of a free market.

Those found in breach of competition laws but will not have disclosed to the CAK will face penalties, including imprisonment of their directors for five years or payment of a Sh10 million fine.

The CAK is demanding full disclosure of directives issued to members by the associations on pricing of product and services.

Mea is currently on an expansion spree and was supposed to receive a Sh1 billion loan from the International Finance Corporation (IFC) last year to fund a Sh3 billion fertiliser plant.

MEA’s 50-kilogramme bag of NPK fertiliser retails at about Sh3,000 while the government’s subsidised product goes for Sh1,600.

In a statement, Yara Country Manager James Craske said the firm supports compliant and ethical business and will cooperate with the CAK.

“Yara is a key player in the agricultural sector in the country and aims to ensure that farmers get the best,” said Mr Craske.