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Mittal SA

guilty of excessive pricing

<font face="arial, geneva, helvetica" size="2">South Africa’s competition regulator, the Competition Tribunal, ruled on Tuesday that local steel producer Mittal Steel South Africa had contravened the Competition Act by charging excessive prices.</font>

<font face="arial, geneva, helvetica" size="2">Shares in Mittal SA fell 4,01% on the news, to R115,00 a share by 12:06.</font>

<font face="arial, geneva, helvetica" size="2">The steel giant was not ready to comment on the matter when contacted by Engineering News Online, but it was expected that the firm would release a statement later on Tuesday.</font>

<font face="arial, geneva, helvetica" size="2">The main complainant in the case, Harmony Gold, welcomed the decision, which was the first time that it had ruled on excessive pricing, the gold-producer said in an emailed statement.</font>

<font face="arial, geneva, helvetica" size="2">Gold major DRDGold, the second company that lodged the complaint, was not immediately available for comment.</font>

<font face="arial, geneva, helvetica" size="2">In an emailed statement, the Tribunal said that Mittal Steel was in breach of Section 8 (a) of the Competition Act by charging an excessive price for its flat steel products to the detriment of consumers.</font>

<font face="arial, geneva, helvetica" size="2">Mittal Steel South Africa expressed disappointment at the Tribunal ruling that it had contravened section 8(a), but said in an electronically-disseminated statement that it was pleased at the ruling to dismiss the complaint that it contravened the Act by inducing its customers not to deal with a competitor.</font>

<font face="arial, geneva, helvetica" size="2">However, it CEO Rick Reato said that the firm's legal team would study the reasons for the judgement, and that Mittal would consider its legal options.</font>

<font face="arial, geneva, helvetica" size="2">"We believe that we have a strong case," he stressed.</font>

<font face="arial, geneva, helvetica" size="2">“It’s been a long haul, but knowing what an unashamedly cost-conscious mining house like Harmony stood to gain from lower steel prices – and the downstream market as a whole – made the battle worthwhile," said Harmony CEO Bernard Swanepoel. "The little guys who didn’t have market power or alternative supply markets suffered at the hands of Iscor and later from Mittal’s unilateral, monopolistic behaviour for many decades."</font>

<font face="arial, geneva, helvetica" size="2">"We think today’s decision will change the way some industries in South Africa will do business,” Swanepoel added.</font>

<font face="arial, geneva, helvetica" size="2">The Tribunal did, however, dismiss the complaint that Mittal had contravened the Act by inducing its customer not to deal with a competitor, on the grounds that it was not satisfied with the facts presented.</font>

<font face="arial, geneva, helvetica" size="2">“We would want to proceed with particular care on an inducement allegation ... After all, on the face of it, the practice of competition consists precisely in inducement,” the Tribunal stated.</font>

<font face="arial, geneva, helvetica" size="2">But, Harmony did not regard this with much importance, and said that it was the focus of less than 10% of the case.</font>

<font face="arial, geneva, helvetica" size="2">The Tribunal is empowered to impose wide ranging remedies for contravention of the Act but it its said that it would postpone considering the remedies sought, until it had heard further evidence in connection with the extent, if any, of the administrative penalty to be imposed.</font>

<font face="arial, geneva, helvetica" size="2">“Although the record is complete in regard to the remaining remedies, we consider it undesirable to consider remedies in a piecemeal fashion,” said the Tribunal.</font>

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