BlueScope tried to fix steel prices

Federal Court in crucial victory

BLUESCOPE Steel has been found guilty of trying to fix the price of steel and managing director Mark Vassella found to be at least aware of aspects of the attempts, with the Australian Competition and Consumer Commission walking away with a major victory in its pursuit of steelindustry cartel behaviour.

Federal Court Judge Michael O’Bryan handed down his decision on the cartel case on Friday, finding BlueScope guilty of attempting to fix flat steel prices over a 10-month period between September 2013 and June 2014, when steel prices were tumbling and BlueScope’s Australian business was under considerable pressure.

In his judgment on Friday, Justice O’Bryan said BlueScope Coated Industrial Products Australia (CIPA) and former sales and marketing manager Jason Ellis engaged in conduct that was aimed at lifting prices across the Australian steel market by trying to reach an “understanding” with BlueScope competitors over baseline steel prices for its own products. The ACCC had alleged that Mr Ellis and other senior BlueScope executives contacted Australian distributors and overseas steel mills to try to force up prices in a bid to help the Australian steel major ride out a global downturn in prices caused by a glut of steel on the market.

Justice O’Bryan said on Friday while there was little evidence BlueScope had succeeded in fixing prices to any great degree, the ACCC’s evidence showed the company’s promotion of “recommended resale prices” was an inducement for its competitors to set prices across the industry.

The ACCC alleged Mr Vassella was aware of “certain aspects of the conduct” through the period. Justice O’Bryan said while evidence of Mr Vassella’s involvement was “sparse”, he was aware of elements of the company’s benchmarking strategy.

“I find that Mr Vassella was aware of the following elements of the benchmarking strategy: that CIPA was promoting its distribution market price lists as recommended resale prices; that CIPA’s aim in doing so was to bring about an increase in prices at the distribution level of the market, which would assist CIPA in both increasing its own prices and increasing sales volume to distributors,” he said.

Justice O’Bryan said Mr Vassella was also aware “CIPA was supporting the strategy by reducing tactical pricing support; that CIPA also wished to support the strategy by aligning NZSA’s prices in the market with CIPA’s prices; that the strategy was having some success in the market; and that CIPA proposed to raise the threat of anti-dumping actions with overseas steel mills”.

But the evidence did not support any findings Mr Vassella was aware that, as part of its benchmarking strategy, the company was attempting to induce other distributors to reach a price fixing understanding with BlueScope in relation to their pricing.

BlueScope shares were down 6c to $18.08 at 11am on AEDT on Friday.