12 November 2009 by

Rapid-fire cartel-busting in the steel sector

The Commission has in a single month referred three separate complaints of collusion in the steel sector to the Tribunal, recommending that the maximum administrative penalty of 10% of annual turnover be imposed on each of the alleged perpetrators.

In the first instance, several producers of long steel products, namely ArcelorMittal South Africa, Cape Gate and Cape Town Iron Steel Works, stand accused of price fixing and market allocation in relation to certain long and flat steel products (rebar, wire rod and sections). After a dawn-raid conducted earlier in the year, the Commission received assistance from another producer, Scaw South Africa (Scaw), which applied for corporate leniency.

The Commission has also referred a complaint pertaining to collusion between competing suppliers of wire and wire products. The complaint involves 11 companies and is linked to a previous referral made in 2007. Following further revelations by Consolidated Wire Industries, a subsidiary of Scaw, charges relating to agreements on a national price list, collusive tendering and market division have been added to the existing price fixing allegations. Customers affected include agricultural co-operatives, hardware stores, fence erectors and resellers.

Thirdly, following a leniency application in 2008 by RSC Ekusasa Mining (RSC) (a subsidiary of Murray and Roberts Steel) the Commission has concluded an investigation into the mining roof bolts sector. The Commission found that the cartel commenced after a new entrant triggered a price war in 2002, which was resolved under the umbrella of an industry body through an agreement to allocate a 25% market share to each of four suppliers, regulated until 2008 through customer allocation and collusion on tendering.

Chris Charter, Director, Competition
Pia Harvey, Senior Associate, Competition

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