‘Cartel conduct’: Steel giant BlueScope’s record fine

A steel producer touted as an Australian success story has been slapped with a record-breaking fine for trying to fix prices.

Steel manufacturing giant BlueScope has been ordered to pay a whopping $57.5m, the highest ever penalty imposed in Australia for so-called “cartel conduct”.

The Port Kembla steel works was slapped with the fine by the Federal Court on Tuesday after it was accused of attempting to fix prices for flat steel products in Australia.

The court also imposed a $575,000 penalty on former general manager Jason Ellis that Justice Michael O’Bryan ruled could not be recovered from an insurance company.

In his judgment, Justice O’Bryan said BlueScope’s conduct warranted a “significant penalty to deter repetition by Mr Ellis” and others who may risk illegal action.

“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,” he said.

Steel manufacturing giant BlueScope has been ordered to pay a whopping $57.5m.

The court found in December that BlueScope and Mr Ellis had attempted to induce eight local steel distributors and overseas manufacturer Yieh Phui to agree to fix or raise the pricing for flat steel products.

The fine itself comes three years after the Australian Competition and Consumer Commission first initiated civil cartel proceedings against the steel giant, which is widely touted as an example of local industry.

In October 2019, Mr Ellis was 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.

He pleaded guilty in September 2020 and was sentenced to eight months imprisonment but was immediately released on a recognisance order in December 2020, a statement from the ACCC revealed.

The watchdog’s commissioner, Liz Carver, said the fine should serve as a “strong warning” to all businesses and individual who attempt to fix prices with their competitors, even if the agreement failed.

“We welcome this substantial penalty against BlueScope,” she said.

Flat steel is widely used in construction, automotive and transport industries. Picture: NCA NewsWire / Martin Ollman

“It is important that penalties are sufficient 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.”

Ms Carver said if BlueScope had been successful, it would have reduced competition and increased prices for flat steel.

The widely used material is an integral component in the construction, manufacturing, automotive and transport industries.

In a statement to Nine News, BlueScope acknowledged the penalty and indicated it might be considering an appeal.

“Penalty orders were made in respect of the civil proceedings brought by the ACCC against BlueScope and one of its former employees,” it said.

“The total penalty ordered against BlueScope was $57.5m. BlueScope has 28 days to file any notice of appeal, should it decide to do so.”

According to the ACCC, a cartel exists when businesses agree to act together instead of competing, including fixing prices or rigging bids.

The next highest fine ordered for such conducted was a $46m penalty against Yazaki Corporation, ordered by the court in May 2018.