Charlotte Mathews
20 October 2009
Johannesburg — STEEL maker ArcelorMittal SA , with the rest of the local business community, would welcome a test case to clarify the principle of "excessive pricing" in competition law, CEO Nonkululeko Nyembezi- Heita said yesterday.
Nyembezi-Heita said excessive pricing was defined in competition law as a price well above economic value, but economic value had never been determined.
Although the issue arose in a complaint by miners Harmony Gold and DRDGold against ArcelorMittal SA, the case was settled recently in a confidential agreement.
The Competition Commission, which investigated the complaint, signed a certificate of nonreferral several years ago so if it wanted to pursue the case, it would have to start a new investigation.
But it was dealing with other excessive pricing cases and could help to clarify the principle.
Nyembezi-Heita was briefing the media about the steel maker's position on the four cases involving ArcelorMittal SA referred to the competition authorities.
Any company with a dominant share of its market, in any country in the world, tended to attract the attention of the regulatory authorities, she said.
ArcelorMittal's share of the long steel products market in SA was about 55% and in flat steel products averaged about 70%.
Apart from the Harmony and DRDGold complaint, a case was referred to the Competition Tribunal by the commission last month in which ArcelorMittal and two other companies are charged with colluding on the pricing of long steel products.
This relates to activities mainly taking place between 2000 and 2004, before Iscor was bought by the global ArcelorMittal group.
A third case was a complaint by Barnes Fencing about being offered less favourable terms than its competitors between 2000 and 2003, which ArcelorMittal hoped would be resolved later this year or early next year, she said. The details of a fourth case, still under investigation but close to being referred to the tribunal, were not entirely clear yet but appeared to relate to joint purchasing arrangements for scrap by steel makers.
A fifth complaint was raised this year by South African canning companies and lodged by the Department of Trade and Industry after ArcelorMittal raised the price of tinplate 70% in the first quarter.
Since 2006 the group had changed its controversial pricing policy to a more transparent benchmark model, which was publicly available, she said.
Its price cuts of 60% this year and a substantial loss reported at the interim stage showed it was a price taker, not a price maker, in SA. A culture of compliance with competition law had been instilled at all levels of the business and a recent internal probe had not uncovered any transgressions. But for the downstream industry, the pricing of steel was only one element, and sometimes a small one, in their ability to become globally competitive, she said.
Be the first to Write a Comment!
Copyright © 2009 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
