Tribunal approves record R1.5bn ArcelorMittal fine

Johannesburg – The Competition Tribunal has approved ArcelorMittal South Africa's (Amsa) settlement agreement with the Competition Commission of R1.5bn.

According to a statement issued by the Competition Commission on Thursday, Amsa will pay a fine of R1.5bn for price fixing.

The settlement agreement was made between the Commission and Amsa in August this year, and the Tribunal approved it on Wednesday.

According to a statement issued by the Commission, the R1.5bn is an administrative penalty for collusion in the flat steel, long steel and scrap metal market, as well as excessive pricing in the flat steel market.  

“This is the largest administrative penalty imposed on a single firm in the 17-year history of competition law enforcement in South Africa,” the statement read.

The steel manufacturer admitted its involvement in long steel and scrap metal cartels, which was in contravention of the Competition Act. Amsa has also agreed to adjust its pricing policy owing to competition concerns in the industry.

Also, Amsa will limit its earnings before interest and tax margin to a cap of 10% for flat steel products sold in SA. The 10% margin cap is subject to variation up to a maximum of 15% if certain market circumstances set out in the settlement agreement arise.

Amsa further committed to R4.6bn capital expenditure over the next five years. 

The agreement covers four complaints against Amsa. Some of these date as far back as 1999, some of which have been investigated by the Commission and others referred to the Tribunal.

Fin24 previously reported that Amsa will pay the fine over five years from 2017 at installments of no less than R300m per annum.

READ: ArcelorMittal to pay R1.5bn price fix fine

“The penalty sends a strong message of deterrence and is an important milestone in the Commission’s enforcement against cartels,” commissioner Tembinkosi Bonakele, said on Monday.

“In addition, the pricing remedy reflects our desire to protect South African consumers against dominant firms, particularly on key industrial products. This remedy is a safeguard in the event that AMSA were to revert to the historical prices that the commission regards as excessive.” 

The share was trading virtually unchanged at R11.75 from the previous close on the JSE.