ArcelorMittal, the country’s largest steel-maker, has been dealt a R1.5 billion fine for price-fixing and collusion in the steel industry.

This is the largest single fine imposed against a single company thus far by the competition authorities. The steel producer has also agreed to invest R4.6 billion in new capital spending to upgrade its plants and improve its competitiveness as part of the settlement with the authorities.

The settlement further provides for a pricing mechanism that will cap the company’s margin on flat steel products for a period of five years.

Minister of Economic Development Ebrahim Patel has welcomed the R1.5 billion fine saying, “The action by the competition authorities is part of a crackdown against abuse of market power and price-fixing that undermine the performance of the economy, imposes unnecessary costs on downstream factories and damages local jobs.”

“South Africa’s competitiveness and industrial performance require an efficient basic steel supplier industry. High levels of concentration together with collusion undermine our national goals,” Patel continued.

“Companies collude because they believe they can get away with it. Over the past seven years, the competition authorities have focused on collusion and abuse of market dominance involving key input costs in the economy, such as steel-making, fertilisers, construction and telecommunications and well as important basic goods such as bread, poultry and flour,” he said.

“Our resolve is clear: we want to promote investment-led economic growth, not collusion-induced economic stagnation. South Africa is open for business and the message we want to send is that we will act against conduct that damages competition and jobs.”

The minister added that this could be a boost for small business and for new investors and warned against further collusion which is now a criminal offence.

“We will not hesitate to act against any further abuse of market power in the steel industry should this be necessary. We have recently brought into effect the provisions in the Competition Act that criminalise collusion and impose jail terms of up to ten years on directors and employees found guilty thereof,” said the minister.