The Competition Authority of Kenya (CAK) has fined nine steel companies a total of Sh338.9 million for engaging in cartel conduct that led to an illegal increase in the cost of steel products.

Among the penalized firms, Corrugated Steel Ltd faces a fine of Sh86.97 million, Tononoka Rolling Mills Ltd Sh62.72 million, Devki Steel Mills Ltd Sh46.3 million, and Doshi and Hardware Ltd Sh41.6 million.

Additionally, Jumbo Steels Mill Ltd will pay Sh33.14 million, Accurate Steel Mills Ltd Sh26.83 million, Nail and Steel Products Ltd Sh22.82 million, Brollo Kenya Ltd Sh9.4 million, and Blue Nile Wire Products Ltd Sh9.16 million.

The CAK's investigation revealed that these companies engaged in coordinated efforts to increase steel product prices, consequently affecting the costs of homes and infrastructure, with items like bars, pipes, beams, and sheets seeing an increase in price.

These steel products constitute over 20 per cent of the construction cost.

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Adano Wario, the acting Director General of CAK, justified the imposed penalties as proportional to the offense, particularly addressing the concerns of consumers who have voiced their dissatisfaction with the high steel product prices in the country.

Wario emphasized that the fines are aimed at reinstating healthy competition within the sector and deterring companies from employing anti-competitive practices as part of their business strategies.

"Cartels are conceived, executed, and enforced by businesses to serve their commercial interests, and to the economic harm of consumers," Wario highlighted.

He further added, "In this matter, the steel firms illegally colluded on prices and margins as well as output strategies."

CAK's investigation into the matter began in August 2020, followed by a nationwide covert field screening.

This screening uncovered a coordinated effort by manufacturers to manipulate pricing and restrict output.

The Authority's subsequent investigation found that the steel firms took actions such as limiting the importation of specific coil and plate sizes, coordinating price releases through ex-factory prices, monitoring competitors' stock levels, and tracking sales volume, among other strategies.

"The steel sector intervention is a progression of the authority’s efforts to facilitate, among others, affordable housing for Kenyans," stated CAK.

Under the Competition Act, CAK is empowered to levy a financial penalty of up to 10 per cent of a company's gross annual turnover for the year preceding the authority's decision.

The gravity of the penalty is determined by factors, including the duration and scale of the violation and the extent of harm caused to consumers.

This recent action by CAK sends a clear message that anti-competitive behaviour will not be tolerated and emphasizes the authority's commitment to ensuring fair market practices for the benefit of consumers and the economy as a whole.