12 September 2007

Mittal Steel fine was appropriate, say Harmony Gold’s lawyers

Nick Altini, director in law firm Cliffe Dekker's Competition and Regulatory Practice Group, said that he was satisfied with the Competition Tribunal's remedies decision in the excessive pricing complaint proceedings that had been brought by the law firm on behalf of Harmony Gold and DRD Gold.

Commenting on the precedent setting fine imposed on Mittal by the Tribunal, Altini said that although the fine was large (nearly R692 million) it was appropriate.

"One must consider that the fine is an important part of the competition justice system. It deters similar conduct by the firm the fine is imposed on and sounds a warning to other firms with market power that they must exercise restraint in the profit making endeavours to ensure that they do not contravene any provision of the Competition Act."

"It also bears mentioning", said Altini, "that excessive pricing has been identified by the Tribunal as a most egregious offence, almost tantamount to price fixing."

Altini said that it is hoped that the behavioural remedy, in terms of which Mittal may no longer concern itself with the markets in which its customers will use their flat steel, will soon result in lower prices for local consumers of flat steel.

"In theory, any flat steel now sold by Mittal could be sold into the local market, whereas before much of Mittal's production had to be shipped offshore. Increased supply availability, should see prices drop. If this does not happen, the Tribunal has the power to impose more drastic remedies, such as a structural remedy which might see Mittal being forced to sell off one of its flat steel producing plants so as to create competition for Mittal”, said Altini.

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