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Passive receipt of cartel-related comms can be prohibited conduct under Kenya’s Competition Act
Joyce Karanja and Nazeera Mia of Bowmans look at a recent ruling by the Kenyan Competition Tribunal that underscores the strict interpretation of cartel conduct and how passive receipt of unsolicited communications can be anti-competitive behaviour
In a significant decision for competition law compliance, the Kenyan Competition Tribunal has upheld findings by the Competition Authority of Kenya (CAK) against several steel manufacturers, including Accurate Steel Mills Limited (Accurate Steel Mills), confirming that mere passive receipt of cartel-related communications can amount to prohibited conduct under the Competition Act.
The CAK initiated investigations into the steel manufacturing and distribution sector in Kenya in August 2020, following market intelligence suggesting coordinated conduct among market players. The investigation led to a search and seizure exercise at the premises of several steel companies, including Accurate Steel Mills.
The CAK’s investigation revealed email correspondence among various steel manufacturers discussing pricing and proposed thickness of tubes and plates. Accurate Steel Mills was copied in these emails, which were sent to the company’s general email address, which email account was unsupervised, with over 44,500 unread emails at the time of the investigation.
Despite Accurate Steel Mills denial of knowledge regarding the circumstances leading to the emails, and despite the lack of evidence that Accurate Steel Mills subsequently adjusted its pricing, the CAK made a definitive finding of cartel conduct based solely on the company’s inclusion in the email correspondence.
The CAK argued that Accurate Steel Mills did not disassociate itself from the emails and made no expression of firm and unambiguous disapproval, thereby tacitly approving the unlawful initiative and effectively encouraging the continuation of the communication and infringement.
The Tribunal’s decision highlights the strict interpretation of cartel conduct under the Competition Act, which prohibits concerted practices by object, meaning that there is no need to test for negative market effects. The Tribunal found that Accurate Steel Mills passive participation, evidenced by its failure to expressly distance itself from the collusive emails, constituted a concerted practice.
The decision serves as a critical reminder for companies to actively monitor and manage their communications to avoid inadvertent involvement in anti-competitive practices. Legal and compliance teams should ensure that all employees are aware of the importance of expressly disassociating from any form of collusive conduct and promptly addressing any unsolicited communications that may suggest anti-competitive behaviour.
Joyce Karanja is a partner and Head of Competition in Bowmans’ Nairobi office. Nazeera Mia is a Knowledge and Learning Lawyer in the Cape Town office and part of the Competition Practice.