- Antitrust body caps AMSA’s Ebit margin on long-steel products
- Payments will start in 2017; no interest levied for 18 months
ArcelorMittal South Africa Ltd. will pay a record penalty for anti-competitive behavior in the country after admitting to being involved in cartels in long steel and scrap metal.
The continent’s biggest steel producer will pay a 1.5 billion rand ($110 million) fine in installments of at least 300 million rand annually over five years starting in 2017, the company and Competition Commission said in statements Monday.
No interest will be levied for the first 18 months once the settlement has been made an order of the Competition Tribunal. After that, the rate will be that as prescribed by the finance minister, currently at 10.5 percent.
The company, known as AMSA, admitted guilt on allegations of fixing prices, allocating customers and sharing commercially sensitive information on long-steel products. It also admitted to fixing scrap-metal prices. It made no admissions on four other matters. The commission started investigating antitrust complaints against the producer in 2008.
The penalty comes as AMSA, which employed almost 10,000 people in the country at the end of 2015, is struggling to restore profit because of a surge in Chinese imports at prices as much as a quarter below local production costs. The company is calling on the government to buy local steel and increase both tariffs and anti-dumping duties to make its business more viable.
“All those who didn’t get leniency are being pursued,” Commissioner Thembinkosi Bonakele said by phone Monday. The settlement with AMSA is the first, and those that don’t reach settlements will be prosecuted, he said. Scaw South Africa Ltd., which was a unit of Anglo American Plc before being sold in 2012, was granted conditional leniency by the commission in 2008.
In addition to the fine, AMSA won’t be allowed a margin on earnings before interest and tax that exceeds 10 percent on flat-steel products from its Vanderbijlpark operations sold in South Africa for five years, the commission said. In certain circumstances, this can reach a limit of 15 percent. That type of steel is used in construction and to make vehicles.
AMSA has also had to commit to 4.64 billion rand in extra capital spending over five years, subject to affordability and market conditions. The shares fell 3.4 percent to 7.46 rand by 1:21 p.m. in Johannesburg, cutting this year’s gain to 66 percent.