In a statement released by the Competition Commission on Monday, the steel group, ArcelorMittal South Africa Limited (Amsa) admitted to being involved in long steel and scrap metal cartels and agreed to pay a penalty of R1,5-billion.
The company has agreed to limit its earnings over a period of five years. The statement read, “Amsa has committed to a R4,6 capital expenditure over the next five years. The Commission has, in turn, agreed that the settlement will cover all pending cases against AMSA including those that are still under investigation.”
An investigation was initiated by the Competition Commission in 2008. “The Commission’s investigation found that AMSA, CISCO, Scaw and Cape Gate (Pty) Ltd (Cape Gate), 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 (SAISI) and the South African Reinforced Concrete Engineers’ Association. The Commission referred its findings to the Tribunal for prosecution,” the statement read.
“The Commission’s investigation found that AMSA, Columbus Steel, Cape Gate and Scaw fixed the purchase price of scrap metal. In this regard, the Commission found that these firms collectively negotiated and agreed a standard formula which was used to determine the purchase price of scrap metal as a buyers’ cartel. The Commission found that AMSA and Columbus Steel, Cape Gate and Scaw collaborated and acted in tandem with the upstream cartel of scrap merchants.”
AMSA has agreed to pay an administrative penalty in the amount of R1,5-billion in five annual instalments of no less than R300-million.
AMSA has agreed that it shall for a period of five years not be permitted to earn an EBIT (earnings before interest and tax) margin percentage greater than 10% relating to flat steel products sold in South Africa. As part of the settlement agreement, AMSA has committed a R4,64-billion capital expenditure over five years.
