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The High Court has set aside a Competition Tribunal judgment and quashed a penalty of approximately KES 62.7 million imposed by the Competition Authority of Kenya (CAK) on Tononoka Rolling Mills Ltd.
The Court held that electronic records relied on by the CAK must satisfy the admissibility requirements of the Evidence Act, including the applicable certification requirements under section 106B. The fact that the CAK obtained the records itself through a lawful search and seizure did not displace those requirements. The Court also rejected the CAK’s attempt, on the facts of the case, to attribute liability between two legally distinct companies within the same corporate group.
Background
The decision arises from the same steel sector investigation that resulted in the Tribunal’s 2025 decision against Accurate Steel Mills Ltd.
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The CAK commenced an industry-wide investigation into suspected coordinated conduct in the steel manufacturing and distribution sector in 2020. In December 2021, it conducted a ‘search and seizure’ of Tononoka Rolling Mills’ premises under warrant and extracted electronic records, including emails, WhatsApp messages and internal documents. Following written and oral representations by Tononoka Rolling Mills, the CAK issued its determination in August 2023, finding it and 12 other undertakings liable for price-fixing and output restriction under section 21 of the Competition Act (Act).
Tononoka Rolling Mills appealed to the Tribunal. In November 2024, the Tribunal expunged the CAK’s Certificate of Electronic Evidence because it had only been produced after the investigation had closed and at the appeal stage. However, in its July 2025 judgment, the Tribunal went on to rely on the underlying electronic records and upheld the CAK’s determination and penalty.
A stricter approach to electronic evidence
In its September 2026 decision, the Court held that section 33(1) of the Evidence Act is mandatory, that is, evidence relied on by the CAK cannot be received unless it meets the admissibility requirements applicable in a court of law. The Court therefore rejected the Tribunal’s view that this requirement applied only to material supplied by third parties and not to electronic records obtained directly by the CAK through search and seizure.
The Court also emphasised the purpose of certification. In its words, the risk of manipulation is ‘heightened, not diminished’ where the body tendering the electronic record is also the body that seized it. Given the potentially significant financial penalties that the CAK may impose, the Court considered that findings of infringement must rest on evidence capable of withstanding scrutiny in a court of law.
This finding is one of the most significant aspects of the judgment for future CAK investigations. Electronic communications commonly form an important part of cartel investigations, particularly where evidence has been obtained during search and seizure exercises. The judgment confirms that lawful seizure does not, by itself, dispense with the statutory requirements governing the admissibility of that evidence.
Undertakings under investigation should scrutinise whether electronic records relied on by the CAK satisfy the applicable certification requirements and when the relevant certificate was prepared. In this case, once the electronic evidence was excluded, the Court found no independent non-electronic evidence capable of establishing that Tononoka Rolling Mills had participated in the alleged cartel conduct.
Separate legal personality within corporate groups – the issue of liability
The CAK’s preliminary investigative notices and demand letters had been addressed to Tononoka Steels Ltd., a related company, while the final determination and penalty were imposed on Tononoka Rolling Mills.
The Court reaffirmed the principle in Salomon v Salomon & Co Ltd. that companies within a corporate group have separate legal personalities. It held that common directors or management were not, without more, sufficient to disregard that distinction.
The Court also considered the ‘single economic unit’ doctrine in Viho Europe BV v Commission of the European Communities. It distinguished that principle as applying to a parent-subsidiary relationship where the subsidiary has no real autonomy in determining its conduct in the market. On the evidence before it, the CAK had not established that Tononoka Rolling Mills lacked commercial autonomy or that its conduct was dictated by Tononoka Steels, or vice versa. The two companies also manufactured different product lines.
The Court identified a further difficulty with the CAK’s position. Under the CAK’s Consolidated Guidelines on Restrictive Trade Practices, arrangements within a single economic unit fall outside section 21(1), because the prohibition concerns agreements between independent undertakings. Accordingly, the CAK could not treat the companies as a single economic unit to attribute liability while simultaneously treating them as independent undertakings for purposes of establishing collusion.
For corporate groups, the decision highlights the importance of maintaining clear evidence of separate commercial decision-making between group companies. It should be noted however, that the judgment concerned two companies within the wider Tononoka Group, and therefore it does not determine more broadly the circumstances in which a subsidiary’s conduct may be attributed to its parent.
Procedural fairness and the evidential record
Tononoka Rolling Mills also argued that CAK officers involved in the investigation subsequently participated in deciding the matter. Relying on the Supreme Court’s decision in Popat & 7 others v Capital Markets Authority, the Court confirmed that a regulator may exercise investigative and decision-making functions under the same statutory framework. However, where those functions are judicial or quasi-judicial in nature, the regulator must comply with Articles 47 and 50(1) of the Constitution.
The bias challenge nevertheless failed on the evidence. Tononoka Rolling Mills had not produced the minutes, membership list or attendance register of the Board that adopted the CAK’s determination and could not establish that the investigating officers had participated in the final decision. The Court held that a bare assertion in submissions was insufficient to displace the presumption of regularity applying to the CAK’s internal governance processes.
Parties raising a similar challenge should request records concerning the composition of the relevant CAK decision-making bodies at an early stage and retain a record of any response. The Court also noted that preliminary objections concerning the propriety or composition of a decision-making panel should ordinarily be determined at the outset, although the failure to do so in this case was not sufficient, by itself, to invalidate the process.
What the decision does not change
The judgment does not materially alter the substantive principles governing enforcement in relation to cartel conduct.
The Court accepted that a concerted practice may be inferred from conduct and that an undertaking which participates in, or is privy to, manifestly anti-competitive communications without publicly distancing itself may be found to have participated in the conduct. Accordingly, the principle applied in the Accurate Steel Mills decision remains relevant. Tononoka Rolling Mills succeeded because the evidence relied on to establish its participation was inadmissible, rather than because the underlying cartel principles were rejected.
Could the decision be appealed?
The Competition Act expressly states that the decision of the High Court shall be final, although the Court noted that its judgment was subject to appellate review in relation to its determination of the corporate liability issue.
Conclusion
The judgment is significant for competition enforcement in Kenya because it places renewed emphasis on the evidential foundation for CAK decisions. Lawful search and seizure does not dispense with the statutory requirements governing the admissibility of electronic evidence, and liability must be attributed to the correct legal entity on a proper evidential basis.
Undertakings facing CAK investigations should scrutinise the admissibility and certification of electronic evidence relied on by the CAK, identify precisely which entity is under investigation, and raise procedural objections early and on a properly documented record.
Joyce Karanja is the Co-head of Competition, Wang’ombe Kariuki, Senior Consultant, and Asghar Merali, Aisha Anwar Ahmed and Mitch Bushry, Associates, Bowmans Kenya
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