For steel industry giants, it was routine business talk. For the Competition Authority of Kenya (CAK), it was collusion. WhatsApp messages, email correspondences and meeting minutes became the smoking gun that led to Kshs. 338.8 million in fines.
The Case in Brief
In August 2023, the CAK shook the Kenya’s steel industry when it imposed record fines totaling KES 338.8 million against nine manufacturers for secretly working together in ways that hurt ordinary consumers.
Since 2020, CAK had been investigating suspicious behavior in the industry. What they uncovered was cartel-like behavior: companies fixing prices, limiting supply, and even blocking certain steel imports.
Investigators found proof through company emails, meeting notes, and documents seized during surprise raids. The evidence showed competitors sharing price lists, raising prices in sync, and agreeing on what products to restrict.
The impact? Higher building costs in a country where steel makes up more than 20% of the expenses in housing and public projects.
This ruling wasn’t just about the money, it was historic. It marked a turning point, showing CAK’s aggressive stance on rooting out anti-competitive practices in Kenya’s economy.
The Second Act; Appeal to the Competition Tribunal
Unsurprisingly, some of the sanctioned steel firms, among them Devki Steel Millers, Tononoka Rolling Mills and Blue Nile Wire Products, challenged CAK’s decision before the Competition Tribunal.
They argued in their appeal that the evidence relied on by CAK was defective. On top of that, they claimed that because their businesses were made up of different related companies, it wouldn’t be fair to hold the entire group responsible for the alleged wrongdoing.
At the heart of each appeal, the companies tried to dismiss the electronic records collected during CAK’s raids. They argued that, under the Evidence Act, this kind of digital proof shouldn’t be allowed in the case, especially where their source cannot be verified by the tribunal.
Determination
The Tribunal dismissed the appeals. It ruled that CAK had followed the law properly, shared all the evidence it was using, and gave the companies a fair chance to defend themselves.
In addressing the question of admissibility of the electronic evidence, the Tribunal clarified that CAK doesn’t have to follow the same strict evidence rules as courts, unless Section 33(1) requires otherwise. The electronic evidence gathered during CAK’s own raids did not require certification under Section 106B of the Evidence Act.
On the core issues, the Tribunal affirmed that price fixing, and output restriction are hardcore restrictions prohibited by law. Once CAK proved that collusion was the intent, it did not need to show actual market harm. The WhatsApp messages, minutes, and email correspondence were enough to prove collusion.
The Tribunal also dismissed the companies’ attempt to shield themselves behind complicated group structures. It pointed out that the firms were essentially under the same control, with directors, shareholders, and managers overlapping, making them one economic unit in practice.
Lessons for Businesses
For traders and businesses, the Competition Act changes the game. Three lessons stand out:
- Every piece of communication counts. Every email, text, and chat can be turned into evidence. Even a casual remark about “holding prices” can turn into an expensive mistake.
- Compliance is survival. With the risk of raids, businesses must invest in training staff, running competition audits, and documenting independent decision-making.
- Corporate structures don’t shield liability. Regulators will look past the paper arrangements to unearth the reality of how businesses are run.
For businesses, this case is a wake-up call. Collusion is not a slap-on-the-wrist offense anymore, it is a risk that can damage your balance sheet. Therefore, what used to be seen as industry consensus can be rebranded by regulators as anti-competitive practice.
Written by: George Laichena | Associate Advocate