The High Court of Kenya has dismissed an appeal by Accurate Steel Mills Ltd against a Sh26.8 million fine imposed three years ago for price-fixing. The fine, equivalent to 0.5 per cent of the manufacturer's gross annual turnover in 2021, was imposed by the Competition Authority of Kenya (CAK) after the company was found guilty of anti-competitive conduct. The court ruled that CAK did not err in law or fact by requiring the manufacturer to explain its involvement.
The case against Accurate Steel Mills Ltd was part of a larger investigation into price-fixing that resulted in fines totalling Sh338.8 million being imposed on over 13 firms. CAK's evidence included emails copied to the manufacturer over a period, which contained anti-competitive information. The company argued that merely receiving the messages did not prove its participation in the malpractice. However, the court found that the company failed to explain how its conduct could not amount to passive participation.
The judge in the case delivered a judgment on September 25, adopting the reasoning in previous decisions that the only way Accurate Steel Mills Ltd could have avoided liability was by publicly denouncing the actions. The company did not do so and was thus found culpable. The court also ruled that the legal burden of proof was on CAK throughout the proceedings, even though the evidential liability shifted to the manufacturer once the regulator presented evidence.
Accurate Steel Mills Ltd had challenged the tribunal's finding that the emails, without more, constituted a concerted practice under sections 21(1) and 21(3)(a) of the Competition Act. The company argued that the tribunal wrongly shifted the burden of proof to it by requiring it to disprove participation in price-fixing arrangements. However, the court found that information about a company's confidential business dealings was peculiarly within the knowledge of the matter.
The court also noted that once the objective fact of an exchange of information has been established, the burden of proving or disproving how it came about must fall upon the party in whose hands that knowledge exclusively resides. The company had maintained that it had merely been copied in emails whose subject lines included "pricing" and "proposed thickness of tubes and pipes". However, the court found that this did not absolve the company of liability.
Besides the fine, CAK had directed Accurate Steel Mills Ltd to implement an approved competition compliance programme within 12 months of its approval. The programme's implementation is subject to a compliance check by the regulator. This is part of the measures aimed at ensuring that the company complies with the Competition Act and avoids future anti-competitive conduct.
The court's decision clears the way for CAK to enforce the penalty against Accurate Steel Mills Ltd. The ruling is a significant milestone in the enforcement of competition law in Kenya, demonstrating the regulator's ability to investigate and prosecute anti-competitive conduct. The case also highlights the importance of companies ensuring compliance with competition law to avoid similar penalties.
Key points
- The High Court of Kenya upholds a Sh26.8 million fine against Accurate Steel Mills Ltd for price-fixing.
- The fine was imposed by the Competition Authority of Kenya after the company was found guilty of anti-competitive conduct.
- The court's decision clears the way for the regulator to enforce the penalty and demonstrates its ability to investigate and prosecute anti-competitive conduct.
