Economy

Competition watchdog probes price-fixing claims among maize millers

maize

Workers dry maize near Dola Maize Millers in Eldoret town, Uasin Gishu County on December 07, 2021. PHOTO | JARED NYATAYA | NMG

The competition watchdog is screening maize and wheat millers amid allegations of price-fixing blamed for the elevated prices of flour.

The Competition Authority of Kenya (CAK) did not name any players under probe but said it was on high alert for any criminal activity that could be pushing prices other than the surging cost of raw materials.

“The Authority is continuously screening various sectors in the market, including key commodities like maize and wheat products, to determine whether the prevailing prices are signalled by the forces of supply and demand and not external factors such as coordination by competitors,” CAK enforcement and compliance manager Gideon Mokaya told Business Daily on email.

“As part of the screenings, we assess the raw material costs, including those that are internationally sourced, and local supply and demand patterns. Any distortions to effective competition are thereafter flagged for investigation.”

This comes at a time price of maize and wheat flour have rallied to record highs, squeezing households already reeling from the high prices of basic commodities like cooking oil and foodstuffs.

A two-kilogramme packet of maize flour has breached the Sh200 mark, a move that is putting pressure on inflation as Kenyans struggle to put food on the table.

Price-fixing is a practice whereby rival companies collude to sell below a certain price.

The watchdog made the announcement as consumer lobbies alleged collusion among milling entities.

“From our preliminary analysis, price-fixing and collusion among millers cannot be ruled out,” said Consumers Federation of Kenya (Cofek) Secretary-General Stephen Mutoro.

“The industry collusion has been evident in artificial shortage, low production and or unusual supply to occasion the increment. We expect firm action from CAK,” the lobby said.

Mr Mokaya asked the public to provide evidence of collusion if they suspect anything amiss.

“The law also allows the Authority to procure evidentiary information from other sources. Therefore, any stakeholder with evidentiary information regarding infringements of the Competition Act may provide the same to the Authority,” said Mr Mokaya.

Section 31 of the Competitions Act on restrictive trade practices bars companies from colluding to determine product prices, setting minimum prices and determining when and whom to offer discounts — acts that hurt consumers and competitors.

The CAK conducts market comparison of international raw material cost trends and local ex-factory price trends to determine whether players are engaged in cartel-like behaviour.

The competition regulator also tracks similarity or a pattern of costs.

It also probes supply chain agreements that suggest market sharing, for instance agreeing on routes or managing capacity in times of shortage.

The watchdog says besides exposing consumers price-fixing locks out rival firms that do not agree to setting of prices.

The watchdog has in the past cracked down on cartels making paints, billboard advertising and collusion between certain players in the supply of electric poles and fined them millions of shillings.

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