Former BlueScope executive Jason Ellis charged with criminal obstruction, company cleared

BlueScope escapes prosecution over alleged price fixing, but a former marketing boss is charged with obstruction.

BlueScope’s Port Kembla steelworks. Picture: AAP

Australian steelmaker BlueScope has escaped criminal prosecution over alleged price fixing, but former marketing boss Jason Ellis has been charged with “inciting the obstruction of a public official” as a consequence of the corporate watchdog’s investigation.

The Australian Competition and Consumer Commission said in a statement the Commonwealth Department of Public Prosecutions had elected not to pursue criminal cartel conduct charges against BlueScope or Mr Ellis, the son of former BHP Group chairman Jerry Ellis.

But ACCC chairman Rod Sims said the CDPP had laid two charges against Mr Ellis for allegedly trying to obstruct its investigation into price-fixing claims against BlueScope.

ACCC chairman Rod Sims said the “very serious” charges against Mr Ellis, which carry a maximum two-year jail term if proven, were the first time the target of an ACCC investigation had been charged with criminal obstruction.

BlueScope and Mr Ellis are also the target of civil proceedings by the ACCC for allegedly trying to fix the prices of imported steel in 2013 to protect the company’s margins as prices fell amid a glut of steel on global markets.

Court documents filed in the civil case claim BlueScope and Mr Ellis approached domestic steel distributors and international mills to try to induce them to set prices on steel sold in Australia by referencing Bluescope’s own pricing book.

The ACCC alleges BlueScope and Mr Ellis — who have said they will defend the civil case — threatened overseas steelmakers with anti-dumping complaints if they did not lift steel prices into Australia

The documents filed by the ACCC allege Mr Ellis and BlueScope devised a “carrot and stick” strategy to protect the company’s position amid a global plunge in steel prices overseas mills that 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 to induce them to 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.

The criminal obstruction charges are listed for a first hearing at the Downing Centre Local Court in Sydney on November 5.

In a response on Tuesday, BlueScope referred to a previous statement that it had conducted its own internal investigation into the allegations.

“While we have not seen all of the information relied upon by the ACCC, based on what we know today, we do not believe that BlueScope, or any current or former employees, have engaged in cartel conduct,” it said.

It would not comment further.

Mr Ellis left BlueScope in 2017 in a management shake-up following the retirement of long-term chief executive Paul O’Malley, in a decision unrelated to the ACCC investigation, which was first disclosed by the company to the market that year.

The alleged price fixing occurred as a flood of Chinese steel hit global markets as the Australian mining boom softened, threatening the company’s dominant position in the Australian steel market, and prompting BlueScope and rival steelmaker Arrium to ramp up complaints about Chinese manufacturers dumping steel into the Australian market.

The international steel glut helped drive annual losses at BlueScope in 2011 and 2012, and indirectly led to the collapse of Arrium in 2016, owing $2.8bn.

The ACCC’s civil case alleges that Mr Ellis and other, unnamed BlueScope executives, tried to talk steel mills in India and Taiwan into basing their prices off those published by BlueScope.

While the corporate watchdog is yet to detail its full case to the Federal Court, its initial complaint did not suggest that any of the companies approached, domestic or international, agreed to help fix steel prices.

BlueScope shares closed unchanged at $11.66 on Tuesday on the news it would not face prosecution for criminal cartel behaviour.