Regulator demands fines for steel price-fixing

4 April 2012

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4 April 2012 | Angeline Albert

The Competition Commission South Africa has recommended two steel producers be fined 10 per cent of their annual turnover having found they fixed prices.

The regulatory body has referred the findings of its cartel investigations into steel producers ArcelorMittal South Africa (AMSA) and Evraz Highveld Steel and Vanadium (EHSV) to the Competition Tribunal South Africa and has recommended the tribunal impose the maximum penalty possible on the firms.

AMSA’s annual turnover in 2011 was R31.5 billion ($4 billion). Highveld’s turnover for the same year was R5.5 billion ($714 million).

The commission began investigating the companies in 2008, following an initial complaint made that year which alleged the steel producers raised their prices at the same times by similar amounts.

In a statement, the commission said: “Evidence before the commission indicates that the steel producers engaged in concerted practices or had understandings that Highveld would follow Mittal’s lead on the pricing mechanism and changes in pricing, including discounts and transport tariffs.”

The commission said its investigation found the companies had divided the markets by specific types of goods, maintained market shares and allocated supply quotas for exports.

“This conduct was maintained through information exchanges on sales volumes, which allowed them to monitor and maintain market share and prices. The understandings were facilitated through meetings and information exchanges through the steel trade association, the South African Iron and Steel Institute (SAISI).

A spokeswoman for the Tribunal said a hearing date to consider the commission’s findings had not been set because the two companies have until 4 May to submit their responses.

Themba Hlengani, a spokesman for AMSA said: “We have noted the Competition Commission’s decision to refer the matter to the tribunal for adjudication. We will study the referral papers and comment thereafter.”

In a statement EHSV said: "EHSV supports and will always support market competition. To this end, we have fully co-operated with the competition authorities throughout their four-year investigation and will continue to do so in the future.  At this stage, we are working with our legal team to review the contents of the referral of the Commission so that we can understand the issues raised therein to warrant the referral and we shall address them thoroughly in our response to the Tribunal."

SAISI has not responded to SM’s request for a comment on the commission’s findings.


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