ArcelorMittal's South African unit agreed to pay a $110 million fine for illegal price fixing, the "largest single" penalty imposed against an individual firm for anti-competitive behaviour in the country.
ArcelorMittal’s South African unit today agreed to pay a $110 million fine for illegal price fixing, the “largest single” penalty imposed against an individual firm for anti-competitive behaviour in the country.
ArcelorMittal SA (AMSA), the South African subsidiary of Lakshmi Mittal’s steel empire, will pay 1.5 billion rand ($110-million) fine for colluding to fix steel prices, the country’s Competition Commission (CC) said as it sent out a firm message about its opposition to cartels.
In terms of an agreement reached with the Commission, AMSA admitted having been involved in the long steel and scrap metal cartels, agreeing to pay the administrative penalty in instalments over the next five years.
AMSA also agreed to remedies relating to complaints against its pricing conduct without admitting that its pricing conduct constituted a contravention of the Competition Act.
“In this regard, AMSA has undertaken that for a period of five years it will limit its EBIT (earnings before interest and tax) margin to a cap of 10 per cent for flat steel products sold in South Africa,” the Commission said in a statement after the agreement was finalised.
AMSA has also committed to a $4.6 billion capital expenditure over the next five years.
“In turn, the Commission agreed that the settlement will cover all pending cases against AMSA, including those that are still under investigation,” the statement added.
The agreement ended a six-year investigation, during which AMSA underwent several threats of closure amidst declining global steel demand as well as opposition from the South African government about its pricing parity policies.
The Commission’s investigation found that AMSA, CISCO, Scaw and Cape Gate (Pty) Ltd, being competitors in the manufacturing of long steel products, engaged in collusion by fixing prices and discounts, allocating customers and sharing commercially sensitive information through the South
African Iron and Steel Institute and the South African Reinforced Concrete Engineers’ Association.
Mittal was reported to have intervened directly earlier this year to get the South African government to come to its rescue by imposing higher tariffs on cheap Chinese steel imports, leading to a turnaround at its Vanderbijlpark operations, which was last year facing the prospect of turning an entire town’s population into unemployed workers.
AMSA was born out of the state steel manufacturer Iscor after Mittal first successfully turned around its ailing operations and then bought it out as he expanded his global steel empire over a decade ago.
The South African government said it welcomed the punishment of the country’s largest steel maker in what it ranked the “largest single” fine imposed so far against an individual firm by the competition authorities.