MAC: Mines and Communities

ArcelorMittal, 9 Others Fined EU575 Million by France antitrust regulator for price fixing

Published by MAC on 2008-12-22
Source: Heather Smith, Bloomberg News Servicw

ArcelorMittal, Kloeckner Distribution Industrielle SA and eight other steelmakers and brokers were fined a record 575.4 million euros ($785.6 million) by the French antitrust regulator for price fixing.

Three units at ArcelorMittal, the world's biggest steelmaker, were fined a total of 302 million euros and Kloeckner's KDI unit was penalized 169 million euros, the Conseil de la Concurrence said today in Paris.

The fine comes as steel companies are cutting back to weather falling demand from automakers and builders, in an effort to slow a freefall in prices sparked by the global credit crisis. ArcelorMittal said last month that it may cut 9,000 jobs globally, or 3 percent of its workforce, to lower costs.

"The Conseil's severity sends a clear message on how seriously it takes cartels," said Jean-Patrice de la Laurencie, a competition lawyer with White & Case in Paris, and former head of the Finance Ministry's competition investigations unit. "The message is even more important in this economic crisis: There won't be any easing up on cartel enforcement."

The cartel was between steel brokers and sellers who raised prices by as much as 10 percent for products like girders, tubes and laminated steel sheets, the regulator said. They divided the French territories into 11 regions, each with a president and officers appointed to guide, enforce and penalize customers who tried to get around the cartel.

Divide Clients, Markets

"Their goal and effect was not only to avoid competitively set prices, but also to divide up clients and markets, annihilating every competitive mechanism between these companies," the regulator said in a statement.

ArcelorMittal said in a statement that it would appeal the amount of the fine. The company didn't contest the existence of the cartel and its penalty was reduced by 17 percent, the French regulator said.

"ArcelorMittal takes matters of this nature extremely seriously and has a rigorous global compliance program in place to combat anticompetitive practices," the Luxembourg-based company said.

Shares of the company fell 22 cents, or 1.3 percent, to 17.28 euros in Amsterdam. It is also appealing a $67.1 million fine for charging "excessively" high prices levied by South African regulators last year.

KDI, in which ArcelorMittal holds a 10 percent stake, also didn't contest the existence of the cartel and had its fine reduced to 169 million euros from 204 million euros. Claudia Uhlendorf, spokeswoman for parent company Kloeckner & Co. in Duisburg, Germany, didn't immediately return a call for comment.

Record Fine

The fine was the highest ever by the regulator, topping a 2005 fine of 534 million euros against mobile-phone companies.

Clients, primarily builders and small and mid-sized companies whose scale prevented them from negotiating better prices, alerted the French Finance Ministry after noticing "suspicious similarities" in the price quotes, the Conseil said.

The agency conducted raids in 2004, after which Lyon, France-based Descours & Cabaud SA applied for leniency, offering to cooperate by providing evidence on the cartel. That assistance reduced the company's fine to 82.6 million euros from 127 million euros. The company's spokesman didn't immediately respond to an e-mailed request for comment.

The cartel was in operation for at least five years, between 1999 and 2004, the Conseil said. After receiving the formal notifications of the allegations, ArcelorMittal and KDI agreed not to contest the facts and put in place controls to ensure the practices stopped.

Other Companies

Belleville, France-based Etablissements Marc Morel et Fils will appeal its 12 million euros fine, a spokesman said. Etablissements Maisonneuve of Chateau-Gontier was fined 8 million euros. A spokesman for the company didn't immediately return a request for comment. Four other companies were fined between 100,000 and 800,000 euros each.

The Federation Francaise de Distribution des Metaux, an industry group, was fined 124,500 euros. The group didn't contest the findings, which lowered its fine from 150,000 euros, the Conseil said. A spokeswoman for the FFDM declined to comment.

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