The Competition Appeal Court will on 23 and 24 October hear Mittal Steel South Africa's appeal against the Competition Tribunal decision on 27 March 2007 that Mittal Steel had contravened the Competition Act by charging an excessive price for its flat steel products to the detriment of consumers.

The Tribunal imposed certain behavioural remedies aimed at reducing the segmentation that Mittal's pricing regime had created in the market for flat steel products. It also imposed an administrative penalty of R691.8-million.

The Tribunal said, the "basis for (Mittal SA's) pricing regime was market segmentation and the limitations that it imposed on arbitrage between the segmented markets".

"Macsteel International, receives flat steel products from Mittal SA at prices significantly lower than those charged to other steel merchants. However Macsteel International is contractually prevented from making this steel available on the domestic market. Similar conditions are imposed on other domestic customers who receive discounts off Mittal SA's domestic list price. Essentially then these contractual limitations all come down to measures which prevent customers who receive steel at prices lower than the pre-selected domestic list price from on-selling this product to domestic customers who may be prepared to pay a price higher than the discounted price but lower than the list price," the Tribunal said.

"The Tribunal added: "Price fixing through the manipulation of supply, is without doubt, the most egregious contravention of competition law and principles", and this "causes considerable damage to customers of the affected products and to the structure and fabric of the economy".

The fine represents 5.5 percent of Mittal's total turnover of R12 759 632 000.00 earned on flat steel in both the local and export market during the preceding year (2003). In terms of the Competition Act the Tribunal is empowered to impose a penalty of up to 10 percent of the firm's annual turnover.

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