KENYA: COMPETITION AUTHORITY OF KENYA IMPOSES RECORD-HIGH PENALTIES ON THE STEEL SECTOR

On 23 August 2023, the Competition Authority of Kenya (CAK) penalised nine (9) steel manufacturers a total of KES 338,849,427.89 (approximately USD 2.3 million) for engaging in prohibited anti-competitive practices, including price fixing and output restriction.  The fines imposed ranged from KES 86,979,378.53 to KES 9,160,894.30. The CAK also indicated that it is engaged in settlement negotiations with a number of other steel manufacturers.

In its press release, the CAK indicated that it commenced country-wide investigations on its own volition in August 2020, which were followed by dawn raids on various steel manufacturers in December 2021. Following its investigations, the CAK’s view was that the parties under investigation had engaged in price-fixing by (i) “agreeing and collectively setting prices and price adjustment timelines”, and (ii) restricting output by “limit(ing) imports of certain steel components thereby causing an artificial shortage that raised prices”.

The Competition Act, No. 12 of 2010 prohibits agreements, decisions or concerted practices by undertakings or trade associations that have either the object or effect of preventing, distorting or lessening competition. The CAK can impose penalties of up to 10% of the gross annual turnover of the undertaking(s) involved in the prohibited conduct, together with other remedial measures that the CAK may deem fit.

This latest enforcement action is a reminder of the CAK’s continued focus on restrictive trade practices in Kenya as the CAK continues amplifying its investigatory powers. The imposition of these record-high penalties also serves as a reminder that businesses need to prepare and implement robust internal competition compliance programmes. Additionally, it would be prudent to periodically conduct competition compliance audits and trainings, to ensure that your business operations do not breach applicable competition laws.