Court sets aside tribunal decision on ArcelorMittal SA

The Competition Appeal Court has set aside a Competition Tribunal decision that ArcelorMittal SA charged too much for its flat steel products, the tribunal said on Friday.

The matter has been referred back to the tribunal, it said in a statement.

According to Judge Dennis Davis’s 90-page judgement, the manner in which the tribunal determined what constituted excessive pricing was fundamentally flawed.

The court also suspended the R691,8-million fine imposed on ArcelorMittal SA by the tribunal in 2007.

The amount was 5,5% of the steel manufacturer’s total turnover of R12,76-billion earned on flat steel in 2003.

ArcelorMittal SA said in a separate statement that it welcomed the Competition Appeal Court’s decision. However, the company said it was “unfortunate” that Friday’s decision did not bring the proceedings to a conclusion.

“We will study the directive provided by the Competition Appeal Court to the tribunal and will comment further once this has been completed,” it said.

The matter arose when gold mining companies Harmony Gold and Durban Roodepoort Deep filed a complaint against ArcelorMittal SA and Macsteel International Holdings.

Harmony alleged that ArcelorMittal SA was a dominant firm in the domestic market for flat primary steel products and it had abused this dominance by charging, in contravention of the Competition Act, excessive prices for its flat steel products.

The complainants also alleged that ArcelorMittal SA had contravened the Act by requiring or inducing customers not to deal with a competitor.

In March 2007, the Competition Tribunal found that ArcelorMittal SA had contravened Section 8 (a) of the Competition Act by charging an excessive price for its flat steel products to the detriment of consumers.

The tribunal, however, dismissed the complaint that ArcelorMittal SA had contravened the Act by inducing its customers not to deal with a competitor, on the grounds that it was not satisfied with the facts presented.

However, the tribunal said the basis for ArcelorMittal SA’s pricing regime was market segmentation.

The tribunal found that Macsteel International received flat steel products from ArcelorMittal SA at prices significantly lower than those charged to other steel merchants.

However, Macsteel International was contractually prevented from making this steel available on the domestic market, the tribunal said at the time.

According to ArcelorMittal SA, the case related to its pricing in 2002, “when the company’s pricing model was different to the present system”.

“In January 2006, ArcelorMittal SA changed its pricing model from import parity pricing to a system based on a basket of domestic prices from a range of international markets,” the company said in Friday’s statement.

“Due to the economic downturn and the decrease of steel prices worldwide, it should be noted that average steel prices have come down significantly since September last year,” it added.—Sapa


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