Five mattress manufacturers suspected of being involved in cartel activity that inflated product prices unknowingly exposed their collusion after jointly seeking a pre-emptive court injunction to block a planned raid on their premises, heightening the watchdog’s fears of secret cooperation and price fixing.
On March 30, the manufacturers moved to court seeking orders to stop an impending raid by the Competition Authority of Kenya (CAK), citing violations of their rights to privacy, property, fair administrative action and data protection.
However, the petitioners quickly withdrew the suit the following day after realising that fatal mistake of filing their suit jointly, which inadvertently strengthened the competition watchdog’s suspicion that they were communicating with one another in ways that could extend to discussions on pricing and other market practices, Business Daily has established.
They withdrew the suit on March 31, on the same day CAK raided the premises Bobmil, Superform, Foam Mattress, Jumbo and Vitafoam in Kisumu, Nairobi, Machakos and Kiambu, carting away documents, mobile phones and laptops.
The anti-trust watchdog is seeking to retrieve information from e-mails, computer hard drives and WhatsApp, including deleted materials, for proof that the firms have been sharing prices and other market-sensitive information in search of abnormal profits.
The withdrawn court documents also show the mattress manufacturers had intelligence on the planned secret dawn raids across the four counties.
“Take notice that Bobmil Industries Limited, Superform Limited, Foam Mattress Limited, Jumbo Foam Mattress Industries Limited and Vitafoam Products, the Petitioners herein, wish to withdraw the suit wholly with no orders as to costs,” the companies said in a withdrawal notice filed by their lawyers, KAN Advocates LLP and seen by the Business Daily.
Meanwhile, even as the withdrawal notice was being signed, CAK officers descended on six mattress manufacturers across four counties and confiscated electronic equipment, including hard disks, mobile phones and sales records, as part of investigations into alleged anti-competitive conduct.
The unusual sequence of events has thrown a spotlight on Kenya’s mattress manufacturing industry, where the competition watchdog suspects firms may have engaged in cartel-like practices capable of distorting prices and exploiting consumers.
CAK in March confirmed that it had conducted a search and seizure operation, known as dawn raids, on six mattress manufacturers located in Nairobi, Kiambu, Machakos and Kisumu counties as part of a widening investigation into alleged anti-competitive behaviour.
Dawn raids, which are allowed by the Competition Act, secure credible evidence that is likely to be concealed, destroyed or altered if advance notice is given.
Investigators seized hard disks, thumb drives, mobile phones, management reports and sales records in what the authority described as an effort to uncover evidence of abuse of dominance, collusive tendering, price-fixing and market allocation.
Initially, the authority did not disclose the identities of the companies raided.
However, on March 30, five mattress manufacturers, including Bobmil Industries, Super Foam Limited, Foam Mattress Limited, Jumbo Foam Mattress Industries Ltd and Vitafoam Products Limited filed a petition against the CAK seeking restraining orders against any dawn raids against them.
“The Petitioners received a report from the 1st Respondent (CAK), that it has invoked Section 32 of the Competition Act (Cap.504) to undertake imminent entry and search business operations against the Petitioners’ premises,” read part of the petition, noting that the targeted companies included those with two main offices in Kisumu and Athi River.
The manufacturers reckoned that CAK, which they noted had already commenced reconnaissance missions in Nairobi, Kisumu and Mombasa to establish the exact locations of their factories, intended to expand the raids to other companies engaged in the ‘conspiracy’ including their branches in Mombasa.
They insisted that they had not been served with any search warrant authorizing such “intrusive enforcement actions.”
“The 1st Respondent has failed and/or neglected to comply with the mandatory provisions of the Fair Administrative Action Act (Cap.7L), including the duty to provide prior notice, reasons, and an opportunity to be heard before undertaking administrative action that adversely affects rights,” read the petition.
“The intended raids are arbitrary, unlawful, and unconstitutional, and amount to an abuse of regulatory power.”
Sources familiar with the matter said the manufacturers appear to have recognised the implications almost immediately, prompting the hurried withdrawal of the case less than 24 hours after it had been filed.
Those found culpable risk penalties equivalent to up to 10 percent of their gross annual turnover, one of the stiffest sanctions available under Kenya’s competition laws.
The raids against the mattress firms come barely a year after the Competition Tribunal upheld a record Sh338.8 million fine imposed on nine steel manufacturers accused of colluding to fix prices, restrict output and alter product dimensions to boost profits at the expense of consumers.
That precedent has elevated concerns among manufacturers that CAK is increasingly willing to pursue complex cartel investigations involving some of the country’s biggest industrial players.
According to competition experts, dawn raids are among the most powerful enforcement tools available to regulators because they allow investigators to secure evidence before it can be hidden, altered or destroyed.
The Competition Act permits such raids where authorities have reasonable grounds to believe that relevant information may not be preserved if advance notice is given.
CAK insists that the operations against the mattress manufacturers should not be interpreted as proof of wrongdoing.
Instead, they mark the beginning of a lengthy investigative process that could take months, depending on the amount of evidence collected and the degree of cooperation from the firms involved.
“Foam mattresses are an essential household commodity used by millions of Kenyan consumers,” said CAK Director-General David Kemei.
“Our intervention seeks to establish whether collusive practices are undermining the affordability and accessibility of these products for ordinary households.”
The regulator said market surveillance conducted by its officers had revealed patterns suggesting possible coordinated behaviour among competitors in the foam mattress sector.
While the authority has not disclosed the precise evidence underpinning the raids, the joint court application by five rival manufacturers has itself become a subject of interest.
The mattress market has become increasingly lucrative as changing consumer preferences drive demand for premium products.
Beyond traditional foam mattresses, manufacturers now offer specialised products such as orthopaedic, memory foam and high-density mattresses designed to improve comfort and sleep quality.
Prices range from roughly Sh4,000 for basic low-density foam mattresses to more than Sh150,000 for premium orthopaedic and memory foam models.
The growing sophistication of the market has intensified competition among manufacturers seeking to capture a share of increasingly health-conscious consumers.
The Competition Authority argues that any coordinated conduct among competitors could significantly affect millions of households because mattresses remain a basic household commodity.
If investigations establish anti-competitive conduct, the authority may order offending firms to cease the practice, reverse the infringement and implement corrective measures designed to restore competition.
The companies could also face financial penalties running into hundreds of millions of shillings, depending on their turnover.
CAK has sought to reassure the firms that all seized information will be handled securely and that affected parties will have an opportunity to make oral and written submissions before any final determination is made.
The authority’s approach mirrors the strategy it successfully employed in the steel cartel case, where investigators relied on emails, WhatsApp messages and meeting records to demonstrate coordination among rival firms.
In that matter, CAK presented evidence showing senior executives allegedly discussing product specifications, supply restrictions and pricing decisions. The watchdog argued that the conduct undermined competition and defrauded consumers.
