The Federal Court has found that Australia’s biggest steelmaker, BlueScope, and one of its former executives attempted to form a cartel with steel distributors and a manufacturer to fix the prices of flat steel products in Australia.
The findings were made by Justice Michael O’Bryan after the Australian Competition and Consumer Commission (ACCC) launched civil court proceedings against the steel giant and its former sales manager Jason Ellis in 2019.
Former BlueScope executive Jason Ellis.Credit:
O’Bryan found that between September 2013 and June 2014, BlueScope and Ellis attempted to induce eight steel distributors in Australia and Taiwanese manufacturer Yieh Phui Enterprise to strike agreements to fix the pricing – and/or raise the pricing – of flat steel products. The ACCC had alleged that Ellis did this by using a “carrot and stick” approach.
BlueScope now faces the prospect of a fine in the many millions of dollars over the case. For corporations, the maximum penalty for each cartel contravention before November 2022, even for attempted conduct, is $10 million. Flat steel products are key products used in the building and infrastructure, transportation and electrical appliance industries.
The ACCC will also seek to have Ellis, who is the son of former BHP chairman Jerry Ellis, banned from managing corporations. Ellis received an eight-month suspended jail term in 2020 after pleading guilty to obstructing the cartel investigation by the competition watchdog. Ellis’ lawyers have been contacted for comment.
BlueScope acknowledged the judgment on Friday and flagged a potential appeal.
“BlueScope is disappointed by this decision and is reviewing the reasons for his honour’s decision. BlueScope now has the opportunity to determine whether there are grounds to appeal.”
BlueScope chairman John Bevan said in the time since the company had become aware of the conduct which led to the legal proceedings, BlueScope had implemented steps to improve staff awareness about competition law requirements.
“The company has also made improvements to our organisational structure, internal systems and processes, training for employees, and developed in-house advisory capabilities in competition law.”
The case was also one of the many competition matters being worked on by then Gilbert + Tobin partner Gina Cass-Gottlieb who was representing BlueScope in the matter before being appointed as chairman of the commission. She has recused herself from all activity relating to the case since her appointment.
ACCC deputy chair Liza Carver said the finding should send a strong warning to businesses and people working in organisations that even attempting to reach a price-fixing agreement with a competitor can have serious consequences for the company and the community.
“If successful, these attempts would have resulted in agreements between competitors which reduced price competition in the Australian flat steel market and increased prices for flat steel products which are widely used in Australia.”
“Cartels not only disadvantage other businesses which are competing lawfully, but can also lead to consumers paying higher prices.”
Ellis left BlueScope in August 2017 for reasons unrelated to the investigation. Before becoming the general manager for sales and marketing, Ellis was president of BlueScope Thailand. He was also a director of industry body Bureau of Steel Manufacturers of Australia between 2013 and 2017.
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