BlueScope used ‘carrot and stick’ cartel, ACCC alleges

ACCC alleges BlueScope used ‘carrot and stick’ cartel tactics in an attempt to control the local price of steel.

Bluescope’s steel works at Port Kembla. Picture: AAP

BlueScope Steel threatened overseas steelmakers with anti-dumping complaints if they did not lift steel prices into Australia, according to court documents filed by the competition regulator in its latest cartel trading case.

The Australian Competition and Consumer Commission accused BlueScope, and former sales manager Jason Ellis - the son of one-time BHP chairman Jerry Ellis - of trying to rig Australian steel prices in 2013 to protect the company’s dominant position in the local market.

Documents filed in a Federal Court civil case, and released by the court on Wednesday, allege Mr Ellis and other senior BlueScope executives contacted Australian distributors and overseas steel mills to try to force up prices in a bid to help the Australian steel major ride out a global downturn in prices caused by a glut of steel on the market.

“Following his appointment as general manager, Ellis devised and, with the assistance of a number of senior BlueScope representatives, implemented a strategy to increase the price of flat steel supplied by BlueScope, as well as that supplied by its competitors, in order to alleviate the consequences of the intense competition arising from the market downturn,” the ACCC alleges.

The documents filed by the ACCC allege Mr Ellis and BlueScope devised a “carrot and stick” strategy to protect the company’s position. The ACCC alleges overseas competitors were told BlueScope would use Australia’s anti-dumping laws to seek punitive duties on imported steel if they did not raise prices. At the same time, the ACCC alleges, BlueScope offered to publish its own prices to its competitors, telling them they could safely lift their own prices without the risk of losing sales volumes.

BlueScope has previously denied involvement in any attempt to fix the price of steel, saying it has been working with the ACCC since the cartel behaviour allegations were first raised in 2017. An extensive internal investigation had revealed no sign staff had breached the law, BlueScope said.

A spokesman for BlueScope said the company could not comment as the matter was still before the courts.

BlueScope chairman John Bevan said in August that, while the company had not seen all of the ACCC’s evidence before the case was filed, “based on what we know today, we do not believe that BlueScope, or any current or former employees, have engaged in cartel conduct”.

The ACCC launched civil against Mr Ellis and BlueScope at the end of August, just ahead of the expiry of a six-year statute of limitations for civil action over the alleged conduct. The Commonwealth Department of Public Prosecutions is still mulling potential criminal charges over the allegations.

BlueScope dropped discounting plans designed to maintain its market share in the face of competition from imported steel, the ACCC says, and asked local independent steel distributors to base all of their sales, whatever the source of the steel, on BlueScope’s price list.

BlueScope and Mr Ellis have said they would defend the claims, and have not yet put their case to the Federal Court, as the matter is still at an early stage.