)
Steel manufacturer BlueScope Steel (ASX: BSL) has been slapped with a $57.5 million penalty for attempting to fix prices for flat steel products supplied in Australia, making it the biggest fine ever imposed nationally for cartel conduct.
The Federal Court has also imposed a $575,000 penalty on BlueScope’s former general manager, Jason Ellis, which by court order cannot be recovered from an insurance company.
The penalty eclipses the $46 million penalty handed in May 2018 to Yazaki Corporation, a Japanese company that was found to have engaged in anti-competitive cartel conduct in the supply of wire harnesses used in the manufacture of the Toyota Camry.
In handing down the Bluescope decision, Federal Court Justice O’Bryan says the cartel conduct warrants ‘a significant penalty to deter repetition by Mr Ellis and by others who may otherwise calculate that the rewards from such conduct outweigh the risks of detection’.
“It is important that the deterrent effect of the penalty being imposed is not undermined by the ability of company directors and officers to insure against the financial cost of the penalty,” Justice O’Bryan says.
The penalty follows a decision by the Federal Court in December last year that BlueScope and Ellis had attempted to induce eight steel distributors in Australia, and an overseas manufacturer, Yieh Phui, to enter agreements to fix and/or raise the level of pricing for flat steel products.
The action against BlueScope and Ellis was launched in 2019 by the Australian Competition and Consumer Commission (ACCC).
Ellis was additionally charged with two counts of inciting the obstruction of a Commonwealth official, encouraging two other BlueScope employees to give false information and evidence to the ACCC, to which he pleaded guilty in September 2020.
Ellis was convicted and sentenced to eight months imprisonment but was immediately released on a recognisance order in December that year.
ACCC Commissioner Liza Carver says the penalties handed to BlueScope and Ellis ‘should serve as a strong warning to all businesses and individuals that attempting to fix prices with competitors will have very serious consequences, even if the attempt fails and they do not reach an agreement’.
“We welcome this substantial penalty against BlueScope. It is important that penalties are sufficiently large to deter even large companies and their employees from breaching Australia’s competition laws.
“Cartel conduct is illegal because it cheats Australians by increasing the prices consumers and business customers have to pay, and by restricting healthy economic growth.
“If BlueScope had been successful in reaching an agreement to fix prices with its competitors, this would have reduced price competition and increased prices for flat steel products which are widely used in the construction, manufacturing, automotive and transport industries.”
Justice O’Bryan says the conduct by BlueScope was deliberate and systematic and he considered that ‘only a substantial penalty for each of the attempts to induce cartel conduct will serve the objectives of specific and general deterrence’.
The Federal Court judge found that the conduct by BlueScope was of a serious kind, that it was carried out at a senior level of the company, that it had the potential to occasion significant loss and damage, and to deliver substantial financial gain to BlueScope.
BlueScope and Ellis were also ordered to pay the ACCC’s costs.
In a statement to the ASX today, BlueScope acknowledges the penalty imposed by the court and says it has 28 days to file any notice of appeal, ‘should it decide to do so’.
Get our daily business news
Sign up to our free email news updates.
)
)
)
)
)
