AcelorMittal Fine ground-breaking – a new dawn in the Steel industry

The R1,5 billion fine slapped on AcelorMittal is the biggest fine in SA corporate history and has set a great prohibition on companies planning to engage in uncompetitive practices into the future. The fine was imposed on the giant steelmaker for colluding to fix prices. The Competition Commission launched an investigation in 2008 after concerns were raised that steel mills had been charging import parity prices, or prices consumers would pay if they imported the commodity.

The company, which is the biggest steel maker in South Africa, and possibly on the African continent admitted to the collusion and entered into a settlement agreement with the Competition Authorities. It admitted to:

• allegations of fixing prices;
• allocating customers and sharing commercially sensitive information
• allegations of price-fixing on scrap metal

The company furthermore has agreed to a pricing remedy for local flat steel products and committed to a R4.6 billion capital investment over a five year period.

As a former part-time Commissioner at the International Trade Administration Commission (ITAC) it is my view that the local steel industry has been anti-competitive for a long time now. The industry almost applies for tariff protection every week with a cost raising effect on the domestic sale of steel products. Not only does this have a negative impact on local consumers, but on the SACU as a whole. The industry has been overlooking capital investments for decades, whilst the Chinese have been investing heavily in industrial development investments and improving efficiencies.

I am confident that this settlement and in particular the capital investment in the industry is long overdue and will result in long term benefits for the SA and SACU steel consumers. Corporate SA has to however come to the party and place the interests on consumers first to ensure long-term sustainable growth and development.