Tribunal finds Cape Gate was part of scrap metal buyers’ cartel
The Competition Tribunal has found that certain large buyers of scrap, including steel and wire products company Cape Gate, had entered into an agreement to fix the purchase price of scrap metal.
The tribunal has found that Cape Gate contravened parts of the Competition Act by participating in price-fixing in the market for the purchase of scrap metal in South Africa.
Scrap metal is a key input in the production of steel products and includes waste metal from cans, household appliances and other metal items.
The other respondents were steel producer ArcelorMittal South Africa (AMSA), stainless steel producer Columbus Stainless and steel manufacturer Scaw South Africa.
AMSA and Columbus admitted liability and concluded settlement agreements with the Competition Commission, which were later confirmed by the tribunal, while Scaw applied for corporate leniency.
The commission submitted that the firms operated as a buyers’ cartel, working together to use the same pricing formula and premium when buying scrap metal from scrap merchants.
The commission contended that collective negotiations by competitors to directly or indirectly agree on a purchase price for scrap, in contrast to individual and independent negotiations between each of them and each of the scrap merchants, is prohibited by the Act.
The buyers’ cartel conduct ended in 2008, the commission notes.
Cape Gate has denied the allegations, but the tribunal dismissed its defences.
Further proceedings in relation to remedies will be determined in due course, the tribunal points out.
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