EN - Tribunal Fines Mittal R691 800 000 And Impose
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EN - Tribunal Fines Mittal R691 800 000 And Imposes Behavioural Remedies
Tribunal fines Mittal R691 800 000 and imposes behavioural remedies
The Competition Tribunal has, today 6 September 2007, released the remedies it
has imposed on Mittal Steel SA after finding on 27 March 2007 that Mittal Steel
had contravened the Competition Act by charging an excessive price for its flat
steel products to the detriment of consumers. It has imposed certain
behavioural remedies aimed at reducing the segmentation that Mittal SA`s pricing
regime has created in the market for flat steel products. It has also imposed
an administrative penalty of R691 800 000 (six hundred and ninety one million,
eight hundred thousand).
The Tribunal said, the "basis for (Mittal SA`s) pricing regime was market
segmentation and the limitations that it imposed on arbitrage between the
segmented markets". "Macsteel International, receives flat steel products from
Mittal SA at prices significantly lower than those charged to other steel
merchants. However Macsteel International is contractually prevented from making
this steel available on the domestic market. Similar conditions are imposed on
other domestic customers who receive discounts off Mittal SA`s domestic list
price. Essentially then these contractual limitations all come down to measures
which prevent customers who receive steel at prices lower than the pre-selected
domestic list price from on-selling this product to domestic customers who may
be prepared to pay a price higher than the discounted price but lower than the
list price.
The Tribunal said, "price fixing through the manipulation of supply,
is, without doubt, the most egregious contravention of competition law and
principles", and this "causes considerable damage to customers of the affected
products and to the structure and fabric of the economy".
For these and other reasons the Tribunal has imposed an administrative penalty
of R691 800 000.
The fine represents 5,5% of Mittal`s total turnover of R12 759 632 000.00 earned
on flat steel in both the local and export market during the preceding year
(2003) In terms of the Competition Act the Tribunal is empowered to impose a
penalty of up to 10% of the firm`s annual turnover.
In order to reduce the segmentation in the market for flat steel products, the
Tribunal also ruled that Mittal SA may not, amongst other things, impose upon
any customer of its flat steel products any conditions in respect of the
customers` use or resale of those products. The Tribunal has also ordered Mittal
SA to make known in the public domain at all times, its list prices, rebates,
discounts and other standard items of sale for flat steel products.
"..it is likely that much will change in consequence of the imposition of this
remedy - those established traders hitherto confined to the domestic market will
likely seek customers in the international market, Macsteel International will
be free to seek domestic customers, and the domestic price of flat steel
products should decline, it should `tend`, as Mr. Dednam has put it, towards the
export price".
Mittal SA is ordered to pay the costs of the complainants including the cost of
two counsel and two expert witnesses in the main matter.
Issued by: Jane Sussens
Communications Advisor
The Competition Tribunal
Tel: (011) 483 2687
Cell: 082 920 0875
Fax: (011) 483 2686
On Behalf of: Lerato Motaung
Registrar
The Competition Tribunal
Tel: (012) 394 3355
Cell: 082 556 3221
E-Mail: leratom@comptrib.co.za
Date: 06/09/2007 17:01:01 Produced by the JSE SENS Department.
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