South Africa’s Competition Tribunal has found that steel producer Mittal Steel SA (Mittal) abused its dominant market position by charging excessive prices for its flat steel products. In so finding, the Tribunal concluded that Mittal is “no mere ‘dominant firm’ – it is ‘super-dominant,’ a ‘monopoly’ in the parlance of US antitrust law. It is, for all intents and purposes, an uncontested firm in an incontestable market.”
The Competition Tribunal initiated the action against Mittal after receiving complaints about Mittal’s prices from gold producers Harmony Gold and DRDGold. The gold producers had complained to South Africa’s Competition Commission in 2003, but the Commission found no violation of the Competition Act. As a result of the Competition Tribunal’s ruling, Mittal now faces possible structural remedies, and an administrative penalty of up to 10 percent of Mittal’s annual turnover of flat steel products (approximately ZAR1.6 billion). The Tribunal will delay its consideration of structural remedies until the administrative penalty is decided; however, it has indicated that it will consider breaking up Mittal’s joint venture with steel trading firm Macsteel International, as well as divestitures of Vanderbijlpark Works and Saldanha Steel. The Tribunal has set a hearing for July 27, 2007 during which it will hear mitigating evidence to determine the extent of the administrative penalty. In the meantime, Mittal will appeal the Competition Tribunal’s finding.