Home Business Nine steel manufacturers fined Ksh 338M for price fixing

Nine steel manufacturers fined Ksh 338M for price fixing

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The Competition Authority of Kenya (CAK) has slapped nine steel manufacturers with a Ksh 338.8 million fine for colluding to hike prices.

According to the competition watchdog, the cartel conduct by the firms to artificially inflate prices of steel products led to increase in the cost of construction of homes and infrastructure.

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Investigations by CAK found the firms to have engaged in price fixing, through agreeing and collectively setting prices and price adjustment timelines.

“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 Dr. Adano Wario, CAK Acting Director-General.

Steel products such as bars, pipes, beams, and sheets, account for over 20pc of the total cost of constructing a house according to analysis by the regulator.

The nine companies penalized for the price fixing include Nail and Steel Products Limited which will pay the state Ksh 22.8 million in fines, Brollo Kenya Limited which will pay Ksh 9.4 million and Blue Nile Wire Products Limited which has been fined Ksh 9.2 million.

Others are Tononoka Rolling Mills Limited which has been fined Ksh 62.7 million, Devki Steel Mills Ksh 46.3 million, Doshi and Hardware Limited Ksh 41.6 million, Corrugated Steel Limited Ksh 87 million and Jumbo Steel Mills, and Accurate Steel Mills Limited which will pay Ksh 33.1 million and Ksh 26.8 million in fines respectively.

“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. In a liberalized market like ours, the forces of supply and demand should signal prices, free from manipulative business practices. Agreements between competitors seek to defeat this fundamental facet of a free economy,” added Wario.

The firms with the exception of Accurate Steel Mills, have been penalized for output restriction by agreeing to limit imports of certain steel components, thereby causing an artificial shortage that raised prices, the authority said.

CAK says as part of the investigation, it is engaging five other steel firms in settlement negotiations as prescribed under section 38 of the Competition Act.

The engagement is aimed at achieving a speedy and
cost-effective resolution and a return of effective competition in the sector.

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