Three largest steel companies are preparing to challenge antitrust fines

The three largest steel companies are preparing to challenge antitrust fines.

The FAS press service reported that it found three companies: NMLK, Severstal and MMK guilty of setting monopoly high prices for hot-rolled flat steel in early 2021 and maintaining them throughout January of this year. The FAS announced this on February 10. The total share of the companies of Vladimir Lisin, Alexei Mordashov and Viktor Rashnikov in this sector of the metallurgical market in the aggregate is more than 70%, according to the service.

The Federal Antimonopoly Service substantiated its decision by referring to the following facts:
manufacturers received a lot of complaints from buyers about unreasonable overpricing;
prices rose faster than the cost of production;
during this period, there was no significant influx of buyers into the hot-rolled steel market, and the demand for products did not increase. However, steelmakers' profits tripled from the previous two years despite similar sales volumes;
there was no adequate evidence of unmet demand from foreign buyers.
On the basis of which the Federal Antimonopoly Service came to the conclusion that there were no grounds for raising the price. The steelmakers presented counter-arguments in the form of foreign quotations, but setting inflated prices on this basis by dominant entities in the domestic market is contrary to competition law. The FAS also considered unconvincing the reference to the possibility of adjusting the price in the contract during preliminary negotiations.

NMLK, Severstal and MMK received an order to stop the offense and comply with the provisions of the law on competition. Now the service will have to initiate an administrative offense case against each company and calculate penalties. This has already been announced in the press service of the FAS. The total fine could reach 39 billion rubles (from 1 to 15% of the proceeds for the previous year 2020), with the largest one for MMK, as unlike the other two companies, it sells most of its products on the Russian market .

Penalties may be reduced if companies provide evidence of extenuating circumstances. In any case, there is already a basis for imposing fines on the lower limit, since all of them are brought to administrative responsibility for the first time.

Companies are preparing to challenge the FAS decision in court, they have 3 months to do so. Their representatives claim that NMLK, Severstal and MMK do not occupy a dominant position in the market, the share of each steelmaker can change significantly during the year.

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