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Johannesburg - ArcelorMittal South Africa announced on Wednesday that it would raise the prices of its steel products. In July, flat steel prices will increase between 4% and 5% while the cost of long steel will go up between 5% and 6%.
This announcement was made two days before the Competition Appeal Court will decide whether to uphold a tribunal decision that ArcelorMittal SA contravened the Competition Act by unfair practices.
Should the appeal be unsuccessful, the steel giant will be liable for a R692m fine - the largest ever issued by the Competition Tribunal.
Commenting on the price increase announcement, ArcelorMittal SA spokesperson Sven Lunsche said the company has used a different pricing model to the one employed the time of the incident in question.
"We believe our pricing is a fair reflection of international pricing," said Lunsche. "One must realise that this is the first increase since September 2008." Average steel prices in South Africa have fallen 60% between September and May, according to Lunsche.
"It's still very tough out there, and ArcelorMittal remains on par with emerging markets," he said.
Friday's hearing stems from a complaint to the competition authorities lodged by Harmony Gold and DRDGold. The gold producers claimed that ArcelorMittal charged excessive prices on its flat steel prices.
According to Miningmx.com, Iscor (as ArcelorMittal was known before) increased steel prices by an average 28% between January and December 2002, while further increases of 6% to 14% and 15% to 17% came into effect in April and May 2004.
According to news agency I-Net Bridge, the fine represented 5.5% of ArcelorMittal's total flat steel turnover of R12.8bn in 2003.
Simon Roberts, chief economist for the Competition Commission, said he was looking forward to Friday's ruling.
"Big businesses should compete on more product offerings and better services rather than through protecting their position by excluding smaller competitors, or dampening competition with their rivals such as through collusive arrangements or understandings."
On Wednesday afternoon ArcelorMittal was trading up 6.91% to 9 515c/share.
- Fin24.com