The largest settlement in the competition authorities' 17-year history was finalised on Wednesday, 16 November, when the Competition Tribunal approved the consent agreement between ArcelorMittal SA and the Competition Commission.
The steel giant has agreed to pay an administrative penalty of R1.5bn over five years at no less than R300m a year and has committed to R4.64bn capital expenditure over the same period. There is an 18-month interest holiday on the administrative penalty after which interest will accrue at the legal rate set by the Treasury, which is currently 10.5%.
The original settlement agreement announced in August was amended shortly before Wednesday's hearing to exclude one of the complainants.
The Barnes Group, which had referred a case of alleged price discrimination by ArcelorMittal SA to the commission in 2007, was excluded from the amended agreement.
In October Barnes sought to review the commission's decision to settle the matter without requiring ArcelorMittal SA to admit that it had contravened the Competition Act. The commission has decided not to refer Barnes' case to the tribunal.
Barnes can now either review the commission's decision to drop its price discrimination case or it can take the case to the tribunal on its own.
ArcelorMittal SA has also agreed to capping its profits for five years. During this time it will limit its margin on earnings before interest and tax to 10% for flat-steel products sold in SA.
The tribunal's hearing came just hours after ArcelorMittal SA announced price increases on flat- and long-steel products that take effect from December 1.
The company attributed the increases to market movements, rising input costs and the need to staunch losses at its Vanderbilpark operation.
Source: Business Day
