Press Statement
23 June 2008
Competition Commission investigates the Steel Industry
On Thursday 19 June 2008, the Competition Commission raided the premises of steel companies, Cape Town Iron and Steel Works (Pty) Ltd and Highveld Steel and Vanadium Corporation Ltd; as well as the premises of the South African Iron and Steel Institute, an association of steel manufacturers based in Pretoria.
Cape Town Iron and Steel Works is a scrap based mill in Cape Town and a wholly owned subsidiary of Murray and Roberts. Highveld Steel and Vanadium Corporation is based in Witbank and manufactures various flat and long steel products. The South African Iron and Steel Institute serves the collective interests of primary steel producers in South Africa and its members are Arcelor Mittal South Africa Ltd, Highveld Steel and Vanadium Corporation Ltd, Scaw Metals Group (Pty) Ltd, Cape Gate and Cape Town Iron Steel Works (Pty) Ltd.
The search is part of the Commission’s investigation into alleged price fixing and exclusive dealing in the steel industry. The Commission initiated this investigation amidst concerns raised by various stakeholders regarding pricing practices in the steel industry. Preliminary research into the industry showed that local customers pay prices charged at import parity pricing levels even though South Africa is a net exporting country. The investigation seeks to establish whether or not the ability to charge and maintain high prices is due to collusive conduct.
The Commission also received a complaint from a member of the public alleging that Mittal South Africa and Highveld Steel and Vanadium Corporation, adjust their prices for flat and long steel products around the same time and with similar percentage increases. It is well known in the steel industry that Highveld follows Mittal in its pricing and although parallel conduct may not always imply concerted practice, it is suggestive of collaboration between the two companies.
Of concern is that the observed lack of transparency in price setting in the steel industry has a major impact on downstream activities. This is because steel products are intermediate goods and a major contributor to the input costs of various sectors, such as building and construction, downstream.
ENDS
Prepared by: FD Beachhead
Dani Cohen 082 897 0443 /
Jennifer Cohen 082 468 6469/
Senzi Dlamini 073 494 0030 /
On behalf of: The Competition Commission
Further info:
Thulani Kunene, Head of Enforcement and Exemptions Division, Competition Commission
012 394 3255 / 084 734 4179
Nompucuko Nontombana, Senior Analyst - Enforcement and Exemptions Division
012 394 3465 / 072 998 9520