BlueScope Steel will appeal price fixing case which attracted a record penalty

BlueScope Steel will appeal a Federal Court finding that it sought to collude on steel pricing, which led to a record $57.5m fine.

BlueScope Steel is appealing a finding that it sought to collude on steel pricing.

BlueScope Steel will appeal a finding that it tried to collude with other steel distributors on the price of flat steel products, which led to the company being hit with a record $57.5m fine by the federal court last month.

Federal Court judge Michael O’Bryan handed down his initial decision on the cartel case in December last year, finding that BlueScope tried to induce eight other Australian steel distributors, as well as Taiwanese manufacturer Yieh Phui, to lift the price of flat steel products over a 10-month period between September 2013 and June 2014.

At the time, steel prices were tumbling and BlueScope’s Australian business was under considerable pressure.

Hearings over penalties were held earlier this year, and Justice O’Bryan handed down his decision on that matter on in late August, finding BlueScope’s conduct “warrants a significant penalty”.

BlueScope said on Monday that it had lodged an appeal with the court.

“As this brings the matter back before the court, BlueScope will not be commenting further at this time,’’ the company told the ASX in a statement after the market had closed for the day.

Because of the way the law was applied in this particular case, BlueScope’s right to appeal against the initial December decision was only triggered when Justice O’Bryan handed down his decision on penalties in August.

The maximum penalty available to the court, according to submissions filed by the Australian Competition and Consumer Commission which brought the case, was $400m for six of the nine attempts made by BlueScope and former sales and marketing manager Jason Ellis, where BlueScope had obtained some potential benefit from the attempt, and $10m for the remainder.

Justice O’Bryan said in August he did not accept the ACCC’s argument that BlueScope had ­obtained a tangible benefit from its conduct.

“Overall, there is no evidence to support a finding that any change to the pricing behaviour of distributors enabled BlueScope to increase its prices at the manufacture/import level of the market and thereby increase its profits,” he said.

Without evidence of a benefit, Justice O’Bryan said the maximum penalty was $90m for all of BlueScope’s attempts.

Justice O’Bryan also imposed a $575,000 penalty on Mr Ellis, and issued orders saying the penalty could not be recovered from an insurance company.

ACCC commissioner Liza Carver said at the time the judgment should serve as a strong warning to corporate Australia that an attempt to fix prices “will have very serious consequences”.

“We welcome this substantial penalty against BlueScope. It is important that penalties are sufficiently large to deter even large companies and their employees from breaching Australia’s competition laws,” she said.

“Cartel conduct is illegal because it cheats Australians by increasing the prices consumers and business customers have to pay, and by restricting healthy economic growth.”

Mr Ellis was also charged with two counts of inciting the obstruction of a commonwealth official over the ACCC’s investigation, for encouraging two other BlueScope employees to give false information and evidence to the ACCC, to which he pleaded guilty in September 2020.

While Mr Ellis was the only BlueScope employee directly penalised in the case, Justice O’Bryan also took aim at BlueScope’s leadership, saying managing director Mark Vassella – the chief executive of Australia and New Zealand at the time of the cartel behaviour – had been given enough information by Mr Ellis about his sales strategy that he should have been alert to the risk the company could fall afoul of Australia’s competition laws.

“There was no evidence that Mr Vassella took any steps to confirm or verify that the commercial strategies being implemented by Mr Ellis were compliant with the act. This indicates that, at the relevant time, senior managers of BlueScope were not sufficiently attentive to the requirements of the act,” Justice O’Bryan said.

BlueScope shares closed 3c lower at $19.20 on Monday, and down from $21.01 when the penalty was handed down in August.