Bluescope appealing cartel and price-fixing fines

Australia’s largest steel maker Bluescope is trying to have a $57.5 million fine for carrying out price-fixing attempts with flat steel distributors thrown out.

Bluescope lawyers have told the appeals court the actions were not of a cartel nature, rather it was encouraging nine competitors to understand “it was in their interests to price differently”.

It is attempting to have the company’s fine – which it has already paid – thrown out on appeal, stating while it went close to the line of breaching cartel actions, it did not actually break the law.

In its annual report, Bluescope said if successful it may have either the whole liability set aside – recovering the entire amount – or at least some contraventions dismissed, reducing the overall penalty size.

The steel maker was hit with the fine in late 2023 after an investigation by the Australian Competition and Consumer Commission (ACCC) into claims Bluescope and its employee engaged in cartel behaviour in the supply of flat steel products.

During the investigation, Bluescope chairman John Bevan said, “we do not believe that BlueScope, or any current or former employees, have engaged in cartel conduct.”

However, in 2023, the Federal Court found that in 2013 and 2014 Bluescope and former general manager of sales and marketing, Jason Ellis, attempted to coerce eight Australian distributors and an overseas manufacturer to sign agreements with price-fixing provisions.

The steel maker was hit with the $57.5 million fine, the highest ever imposed for cartel conduct.

This penalty came despite, as the judge stated during the case, “BlueScope [making] substantial efforts to strengthen its compliance processes and BlueScope ha[ving] not previously been found to have contravened the cartel conduct prohibitions or any other competition provision of the Act.”

At the time, the ACCC welcomed the high penalty.

“This 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,” ACCC Commissioner Liza Carver said.

“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.”

Mr Ellis was also slapped with a $575,000 fine, with the judge ruled the cost could not be recovered through an insurance company, as a “significant penalty to deter repetition by Mr Ellis”.

Following the penalty, Bluescope immediately filed a notice of appeal and is now having its day in court.