Iron Manufacturers Overcome Price-gouging Charges

The companies were charged for allegedly increasing prices between 4.7 to 140pc

Prosecutor of the Trade Competition & Consumer Protection Authority has lost another case against six corrugated iron manufacturers, charged with conspiracy of price gouging.

The prosecutor of the authority accused the six manufacturers of violating the anti-competition act by fixing prices for corrugated iron products in increments that ranged from 4.7pc to 140pc higher beginning in October of last year. In the charges filed on January 23, 2018, the prosecutor sought penalties amounting to 10pc of the defendants’ annual turnover and suspension of their trade licenses until prices of corrugated iron fall back to levels prior to the alleged price fixing.

The price-fixing charges against the companies were filed a month after the 15pc devaluation of the Birr in October 2017, although the prosecutor did not mention this fact in the charges.  In November last year, investigators from the authority launched a series of probes into the operations of various manufacturers, importers and retailers. After the investigation, importers of pharmaceuticals and veterinary medicine, steel manufacturers and the food processor Fafa Foods were charged. These companies were accused of price manipulation and distortions.

The six steel manufacturing defendants—Ethiopian Steel Profiling & Building, Kombolcha Steel Products Industry, Ethiopian Steel, Alem Steel, Bazeto Industry & Trade and Werksew Legesse Eshet Metal Engineering-filed their statements of defence on February 8, 2018.

The companies, represented by defence lawyers, denied any involvement in anti-competitive acts, concerted practices and conspiracy of price fixing in their statements of defence. The companies also argued that the charges brought against them by the prosecutor were not supported in the oral arguments or by documentary evidence. They also argued that the prosecutor failed to show when the alleged illegal acts took place, and by whom the price gouging was carried out.

After reviewing the statement of defence submitted by the defendants, the tribunal proceeded to oral litigation held on April 25, 2018.  The court heard witnesses presented both by the prosecutor and defendants on May 17, 2018 and then again on June 6 2018.

After reviewing the case for the past eight months, the tribunal, presided over by Kidane Tsegaye, Mekdes Mekurya and Biruh Gemeda, closed the case after passing judgement in favour of the defendants. In their ruling, the judges stated that the prosecution documentary evidence and witnesses did not prove the charges of horizontal price fixing and conspiracy filed against the defendants.

“We will appeal to the appellate tribunal,” Melake Tsehay, the authority’s prosecutor who handled the case told Fortune.

A month ago, the tribunal had closed a similar case brought against eight pharmaceutical product distributors and retailers by the prosecutors of the authority.  In that ruling, the judges reached a similar conclusion and ruled in favour of the companies by rejecting the claims made by the prosecutor. They stated that the evidence and witnesses presented did not support the charges. Displeased with the ruling, the prosecutor appealed to the appellate tribunal, where the case is still pending.


Published on Aug 18,2018 [ Vol 19 ,No 955]



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