BlueScope exec told subsidiary to ‘toe line’ on pricing: ACCC

Former BlueScope Steel sales boss Jason Ellis pressured a colleague to ‘toe the line’ on pricing, according to the ACCC.

BlueScope CEO Mark Vassella Picture: Hollie Adams

Former BlueScope Steel sales boss Jason Ellis pressured a colleague to “toe the line” and lift the price of BlueScope’s New Zealand-produced steel as part of an alleged price-fixing scheme, according to the ACCC.

The pressure came as part of a plan to convince a rival steel importer to lift the prices it charged to Australian customers, according to a statement of claim in the competition watchdog’s cartel case against BlueScope and its then sales boss, Mr Ellis.

Mr Ellis pitched the plan to a director of Wright Steel at a meeting at Melbourne’s Crown casino in September 2013, allegedly ­telling the rival importer that BlueScope required “Wright’s ­assistance to put value back into the Australian steel industry”.

Wright was a significant importer of flat steel from Taiwan and India, and a direct rival in BlueScope’s key local markets.

According to the ACCC, in ­addition to offering to send BlueScope’s price list through to Wright each month, as a benchmark for its own prices, at the Crown casino meeting Mr Ellis promised to “direct” New Zealand Steel Australia, a BlueScope subsidiary importing steel from its operations in New Zealand, to lift its own prices to that benchmark rate.

He then told the general manager of the subsidiary that BlueScope needed NZSA to “toe the line” and introduce a recommended resale price in line with a benchmark rate to be published by BlueScope, according to the statement of claim. The meeting with Wright was one of a series held by Mr Ellis with rival importers and distributors, according to the ACCC, seeking to put together a general agreement to fix prices and margins for the benefit of all.

At the Crown Casino meeting, Ellis said to Wright Steel’s representative words to the effect that:

But the price lift for New Zealand steel, according to the ACCC, is a key item in the commission’s claim that Mr Ellis was trying to fix the Australian steel market, as it indicated BlueScope would not seek to take advantage of its competitors if they lifted their own ­prices to fall in line with those of the Australian major.

“Ellis’s intention in raising the prices of flat steel products sold by NZSA was to encourage Wright Steel and other Australian steel distributors to have confidence that they would not lose market share by increasing their own ­prices,” the statement of claim says.

A month later, Mr Ellis briefed BlueScope’s Australian and New Zealand chief executive, Mark Vassella, now the company’s ­managing director, in a report out­lining a “mechanism to assist ­Australian steel distributors to increase their prices and improve profitability”, by attempting to set a floor price for flat steel products.

The ACCC does not accuse Mr Vassella of being directly involved in formulating or carrying out the alleged price-fixing scheme, but says he was “aware of certain ­aspects of the conduct” that made up the alleged cartel behaviour.

Mr Vassella was given that ­report on October 11, according to the ACCC. On October 17, Mr Ellis directed his own national sales manager, Matthew Hennessy, that BlueScope needed to “align NZSA’s list price with BlueScope’s pricing information so that there was an alignment with the benchmarking strategy”, according to the NZSA.

A day later, the NZSA general manager confirmed that NZSA would lift its own prices in line with BlueScope’s pricing charts.

BlueScope and Mr Ellis deny any attempt to try to fix Australian steel prices, and the ACCC ­allegations are yet to be tested in court.

The ACCC does not allege that Wright Steel, or any of the other companies allegedly approached, have engaged in cartel behaviour, and The Weekend Australian does not suggest they have colluded in the conduct.