STEEL INDUSTRY: Competition Commission to investigate uncompetitive behaviour.

STEEL INDUSTRY

 

COMPETITION COMMISSION 

to investigate 

UNCOMPETITIVE BEHAVIOUR

 

Dear Steel Industry employer

 

On 7 April 2023, the Competition Commission (‘the Commission’), under the auspices of the Department of Trade, Industry and Competition (DTIC), published a notice in the Government Gazette regarding the conducting of an inquiry into the Steel Market. In said notice, the Commission invites the public to “provide information to the market inquiry”. 

 

According to the enclosed Draft Terms of Reference (‘ToR’), in 2014 the South African steel industry was ranked 19th in terms of global crude steel production. For the years of 2018 and 2019, the World Steel Association ranked South Africa 27th globally and in 2021, South Africa was ranked 32nd, clearly indicating that South Africa’s competitiveness in the production and supply of steel is in decline.

 

NEASA has written on and about the unfair, uncompetitive, monopolistic impediments in the steel sector for longer than a decade. It seems that the DTIC may have finally taken the first step in tackling and investigating the prejudicial practices in this sector.

 

From the wording of the Draft ToR of the planned market inquiry, the inquiry is based on the fact that “the Commission has reason to believe that there exist market features which impede, distort or restrict competition in the South African steel industry.” The Inquiry notes that there exist various potential uncompetitive practices perpetrated by, among others, monopolistic steel producers like AMSA. 

 

It should be noted that, at this time, comment is only required in relation to the scope of the investigation and a further opportunity will be provided for submission of additional information relating to the inquiry itself.

 

The full Draft ToR of the inquiry can be read and accessed here.

 

Currently the draft scope of the inquiry includes only the following:

 

• Inputs and raw materials

• Iron ore

• Market concentration and market power
• Pricing dynamics
• Access to logistics infrastructure and impact on emerging iron ore miners
• Other barriers to entry and expansion associated with production and supply of iron ore
• Regulatory barriers

 

 

• Coking Coal

 

 

• Upstream primary steel production

 

• Market concentration
• Price setting mechanisms and impact on downstream metal fabricators

 

NEASA herewith urgently invites employers in the steel sector to peruse the Draft ToR of the planned inquiry, and to submit any and all additional areas which the anticipated inquiry should include, and which may broaden the scope of the Draft ToR.

 

Submissions can be emailed to rona@neasa.co.za.

 

The deadline for submissions to NEASA is 24 April 2023.

 

For more information:

NEASA Media Department

media@neasa.co.za