Last company settles in scrap metal competition probe

THE Competition Tribunal has confirmed a R2.9m settlement between the Competition Commission and East Rand-based scrap metal trader, Ben Jacobs Iron and Steel.

The penalty is for price-fixing and dividing up the market in the ferrous and nonferrous scrap metals sector. The fine represents 5% of the company’s annual turnover for the financial year to June 2006.

The tribunal said on Thursday it could not comment on proceedings outside of settlement hearings. But it had been told by the Competition Commission that this was the last company to settle in cases stretching back to 2006.

"The settlement follows an investigation initiated in … August 2006 emanating from a large merger filing in which The New Reclamation Group (Reclam Group) intended to acquire the business of SA Metal Group and its associated company called Waste Control," the tribunal said on Wednesday.

"Documents submitted revealed that various arrangements entered into between Reclam Group and Waste Control contravened the Competition Act."

The tribunal said further investigation had revealed further contraventions by certain suppliers of ferrous and nonferrous scrap metal. These included companies agreeing to divide up markets, fix prices and fix trading conditions.

The matter was referred to the tribunal in August 2010. It said the settlement included that Ben Jacobs Iron and Steel undertook not to engage in further activities of this kind.

In 2008, Reclam Group settled with a R145m fine for collusion. It agreed to pay an administrative penalty that represented 6% of annual turnover. The Competition Act allows for penalties of up to 10% of a business’s annual turnover.

"The broad issues and practices in the scrap recycling and steel industry which prompted the (Competition) Commission’s investigation pre-date the promulgation of the Competition Act. Reclam is pleased to have resolved this uncertainty, and is committed to conducting its business in line with best practice," the group said at the time.

Other companies that have paid fines are Power Metal Recyclers; Universal and Fine Trading; National Scrap Metal; Abeddac Metals; Amalgamated Metals Recycling; and SA Metal Group. These came to R80m in total.

by Mark Allix/BDlive