ArcelorMittal South Africa will pay an administrative penalty of R1.5 billion‚ which is half of the R3 billion it had faced for price fixing after a Competition Commission ruling.
The company in a statement on Monday that it would pay the penalty over five years‚ in instalments of no less than R300 million per annum‚ commencing in 2017.
In 2012‚ the Competition Commission asked the Competition Tribunal to penalise ArcelorMittal up to 10% of its annual turnover for collusion. Business Day reported then that ArcelorMittal’s turnover for 2011 was R31‚5bn. The recommendation to the Competition Tribunal came four years after a complaint was filed with the authorities alleging that ArcelorMittal and another company had adjusted their prices for steel products around the same time and with similar percentage increases.
On Monday‚ ArcelorMittal said a settlement agreement had been reached with the Competition Commission.
“An application has been filed with the Competition Tribunal for confirmation of this Settlement Agreement
as an order of the Tribunal… Subject to the final order being granted‚ this will bring an end to these legal matters‚ which have been pending against the Company for some time.
“The Company has also pointed out that the matters related to historical conduct by the Company‚ which has ceased.”
Commenting on the amount of the penalty‚ the company said: “In the light of the vulnerable state of the steel industry and the position of the company‚ no interest will be levied on the administrative penalty for the first 18 months from the date on which the Settlement Agreement is made an order of the Tribunal and thereafter interest will be levied on the remaining outstanding balance at the prevailing interest rate prescribed by the Minister of Finance‚ currently 10.5%.”
The company admitted guilt on:
-the Long steel matter‚ relating to allegations of fixing prices‚ allocating customers and sharing commercially sensitive information; and
-the scrap metal matter relating to allegations of price fixing by the company as a consumer of scrap.
The company has made no admission regarding the excessive pricing complaint and the Commission has made
no finding on this. It added: “Notwithstanding‚ in the light of the previous concerns regarding pricing and the Company’s commitment to work with Government and all stakeholders to contribute to growth of the South African economy‚ the Company has agreed to a pricing remedy for local flat steel products.”
In terms of this‚ the company 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 over a 12 months period‚ measured over the Company’s financial year. “However‚ the Company will be permitted to exceed the 10% cap up to a maximum of 15% in certain defined circumstances.”
The Company has also committed to capital investment of at least R4.6 billion over the five-year period subject to it being affordable and feasible in the light of the financial circumstances.
ArcelorMittal SA said there is a firm commitment by the leadership of the company to ensure that the company is committed to being a good corporate citizen that makes a valuable contribution to South Africa‚ and that it conducts its business in a transparent and responsible manner.
“The company has been proactive and various interventions have already been implemented within the Company to
ensure that there is more vigilance to guard against such conduct happening again. This includes an enhanced training and compliance programme.”
ArcelorMittal to pay fine of R1.5bn for price fixing
ArcelorMittal South Africa will pay an administrative penalty of R1.5 billion‚ which is half of the R3 billion it had faced for price fixing after a Competition Commission ruling.
The company in a statement on Monday that it would pay the penalty over five years‚ in instalments of no less than R300 million per annum‚ commencing in 2017.
In 2012‚ the Competition Commission asked the Competition Tribunal to penalise ArcelorMittal up to 10% of its annual turnover for collusion. Business Day reported then that ArcelorMittal’s turnover for 2011 was R31‚5bn. The recommendation to the Competition Tribunal came four years after a complaint was filed with the authorities alleging that ArcelorMittal and another company had adjusted their prices for steel products around the same time and with similar percentage increases.
On Monday‚ ArcelorMittal said a settlement agreement had been reached with the Competition Commission.
“An application has been filed with the Competition Tribunal for confirmation of this Settlement Agreement
as an order of the Tribunal… Subject to the final order being granted‚ this will bring an end to these legal matters‚ which have been pending against the Company for some time.
“The Company has also pointed out that the matters related to historical conduct by the Company‚ which has ceased.”
Commenting on the amount of the penalty‚ the company said: “In the light of the vulnerable state of the steel industry and the position of the company‚ no interest will be levied on the administrative penalty for the first 18 months from the date on which the Settlement Agreement is made an order of the Tribunal and thereafter interest will be levied on the remaining outstanding balance at the prevailing interest rate prescribed by the Minister of Finance‚ currently 10.5%.”
The company admitted guilt on:
-the Long steel matter‚ relating to allegations of fixing prices‚ allocating customers and sharing commercially sensitive information; and
-the scrap metal matter relating to allegations of price fixing by the company as a consumer of scrap.
The company has made no admission regarding the excessive pricing complaint and the Commission has made
no finding on this. It added: “Notwithstanding‚ in the light of the previous concerns regarding pricing and the Company’s commitment to work with Government and all stakeholders to contribute to growth of the South African economy‚ the Company has agreed to a pricing remedy for local flat steel products.”
In terms of this‚ the company 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 over a 12 months period‚ measured over the Company’s financial year. “However‚ the Company will be permitted to exceed the 10% cap up to a maximum of 15% in certain defined circumstances.”
The Company has also committed to capital investment of at least R4.6 billion over the five-year period subject to it being affordable and feasible in the light of the financial circumstances.
ArcelorMittal SA said there is a firm commitment by the leadership of the company to ensure that the company is committed to being a good corporate citizen that makes a valuable contribution to South Africa‚ and that it conducts its business in a transparent and responsible manner.
“The company has been proactive and various interventions have already been implemented within the Company to
ensure that there is more vigilance to guard against such conduct happening again. This includes an enhanced training and compliance programme.”
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