Gold Mining Companies against Steel Giant Iscor

Harmony and Durban Roodepoort Deep, two gold mining companies, have accused steel giant Iscor of anti-competitive acting.

The gold companies allege that Iscor is potentially guilty of two abuses of dominance. These are: Iscor charges excessive prices for its local flat steel products, and Iscor provides active inducements to discourage purchasers of its steel from importing competing products.

The filing with the Competition Commission argues that Iscor uses a principle of import parity pricing which has meant prices are artificially inflated to meet the prices of similar imported products. This would not be possible if the market were competitive.

This bears no relation to Iscor's advantages of low rand-based production costs, including being able to buy its iron ore at a cost plus a management fee from Kumba, resulting in the company becoming one of the lowest cost steel producers in the world. The complaint alleges that local prices are far above the export price charged by Iscor for the same products when these are sold abroad.

The complaint argues that the second kind of abuse of dominance is active inducements by Iscor to discourage purchasers of its steel from importing competing products. For example, Iscor sets its local price above the import parity level, but then reduces the price to meet the import price by rebates to its current suppliers.

Some 30% of this rebate depends on whether the purchaser has engaged in imports for a specified period. This way, Iscor maintains its excessive prices at all times and uses the pricing system to discourage competing imports by inducements to those who have to pay Iscor's domestic prices. Typically, the benefits of these rebates are not made available to end consumers like Harmony and Durban Roodepoort Deep.

Iscor has dismissed criticism of its steel price increases as "misinformed".

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&to=http://www.harmony.com/' target=_blank>HARMONY

&to=http://www.durbans.com/' target=_blank>Durban Roodepoort Deep

&to=http://www.iscor.com/' target=_blank>ISCOR