Steel Giants Fight Sh338m ‘Price Fixing’ Penalty

Nine steel companies that were recently fined a combined Sh338 million by the Competition Authority of Kenya (CAK) for colluding on steel prices have individually moved to the Competition Tribunal, seeking to quash the penalty.

The companies, Nail and Steel Products, Brollo Kenya, Blue Nile Wire Products, Tononoka Rolling Mills, Devki Steel Mills, Doshi & Hardware, Corrugated Steel, Jumbo Steel Mills, and Accurate Steel Mills were found guilty of engaging in price fixing by collectively setting prices and price adjustment timelines.

Further, the companies, except Accurate Steel Mills, were penalised for output restrictions by agreeing to limit imports of certain steel components, thereby causing an artificial shortage that raised prices.

According to the CAK acting director-general Adano Wario, the nine companies had, by mid-October, already tendered their appeals before the tribunal as they sought to have the penalties set aside.

“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.

Price-fixing is an anti-competitive agreement between two competing sellers to maintain prices at a certain level by controlling supply and demand.

RELATED: Steel Giants Hit With Sh338m Fine for Price Fixing

Section 31 of the Competition Act forbids companies from conspiring to control product prices, setting minimum charges, and determining when and to whom to offer discounts — practices that hurt consumers and competitors.

In August, CAK said the nine firms were found to have engaged in cartel conduct whose effect was to increase the cost of constructing homes and infrastructure by artificially inflating the prices of steel products.

The highest fine was imposed on Corrugated Steel at Sh86.9 million, followed by Tononoka and Devki, at Sh62.7 million and Sh46.3 million, respectively.

Doshi was fined Sh41.6 million, Jumbo Steel Mills Sh33.1 million, Accurate Steel Mills Sh26.8 million, Nail and Steel Products Sh22.8 million, Brollo Kenya Sh9.4 million, and Blue Nile Wire Products will pay Sh9.2 million.

The authority said the penalties were proportionate to the offense committed and were meant to restore competition in the sector and deter companies from deploying anticompetitive practices as a business strategy.

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