Steel makers fined Sh338m launch legal battle with CAK
Nine steel manufacturers fined Sh338 million by the Competition Authority of Kenya (CAK) for price-fixing and causing artificial shortages of key construction materials, have appealed the decision. PHOTO | SHUTTERSTOCK
Nine steel manufacturers fined Sh338 million by the Competition Authority of Kenya (CAK) for price-fixing and causing artificial shortages of key construction materials, have appealed the decision.
The nine firms that control Kenya’s steel industry, including Devki Group, Doshi, Corrugated Steel Ltd and Tononoka Rolling Mills, had by last week tendered their individual appeals before the Competition Tribunal, CAK acting director-general Adano Wario, has confirmed.
“With regard to the steel sector, the nine manufacturers appealed the authority’s decision to the Competition Tribunal. Given that it is now a quasi-judicial matter, we cannot comment further on the specifics,” said Dr Wario on Monday.
The authority fined the manufacturers following a multi-year investigation into the conduct of the sector, establishing that the companies colluded to cause shortages and fix prices, which led to a sharp increase in the cost of construction of buildings and key infrastructure projects.
“The companies engaged in cartel conduct whose effect was to increase the cost of construction of homes and infrastructure by artificially inflating the prices of steel products. Contextually, steel products such as bars, pipes, beams, and sheets, account for over 20 percent of the total cost of constructing a house,” said the CAK when it made the announcement a month ago.
On Monday, Dr Wario said the authority was investigating cartels in the manufacturing and agriculture sectors, but did not divulge much information.
“The authority is currently at various stages of investigating cartels in several sectors of the economy, including manufacturing and agriculture. Once finalised, we shall publish the findings of these investigations, as we have previously done with other matters, and in line with the provisions of the Competition Act,” he said.
The investigations are being conducted in the backdrop of high food and other commodity prices that have persisted since last year when inflation has been high and stayed above the Central Bank of Kenya’s upper limit of 7.5 percent for a year until July.
The Authority is this week hosting the African Competition Forum (ACF) Cartel Workshop where competition authorities from across Africa and beyond have converged to exchange ideas on strategies cartels use to drive their operations, and interventions that have worked.
The watchdogs on Monday acknowledged the need for a collaborative approach to enforcement of competition laws in the context of the ongoing implementation of the African Continental Free Trade Area (AfCFTA) Competition Protocol.
“Research indicates that cartelization increases the prices of goods and services by about 25%. Imagine then the impact of our interventions on consumers’ purchasing power, Government expenditure during procurement, and infrastructural development, to mention just a few,” said Mr Boniface Makongo, CAK’s Director of Competition and Consumer Protection, delivering the acting DG’s remarks during opening of the forum on Monday.
Players in the sector indicate that more businesses are adopting the use of digital tools such as artificial intelligence and algorithms to perpetuate cartels and conceal themselves from regulatory scrutiny.
“Competition agencies must therefore keep abreast of these advances and invest in tools to counter these attempts by cartels,” Dr Wario said.
