BlueScope Steel and former GM found guilty of cartel conduct

The Federal Court has found BlueScope Steel (ASX: BSL) and its former general manager of sales and marketing Jason Ellis tried to induce competitors to fix prices for flat steel products between September 2013 and June 2014.

The judgment follows civil cartel proceedings brought by the ACCC, with a hearing on penalties and other orders has been set down for 3 April 2023.

In addition to seeking penalties against both BlueScope and Jason Ellis, the competition watchdog is also seeking an order disqualifying Ellis from managing corporations for a period to be determined by the court.

The maximum penalty per cartel contravention for a corporation prior to 9 November 2022 is the greater of $10 million, three times the total benefits that have been obtained, or 10 per cent of annual turnover connected with Australia if a total value cannot be determined.

For individuals, the maximum penalty is $500,000 for each act or omission. 

The court found that during the period in question, BlueScope and Ellis attempted to induce eight steel distributors in Australia, and overseas manufacturer, Yieh Phui, to enter agreements to fix and/or raise the level of pricing for flat steel products supplied in Australia.

“The Court has found that BlueScope, which is one of Australia’s largest companies, and its former senior executive, Jason Ellis, attempted to induce competitors to enter into price fixing arrangements,” ACCC Commissioner Liza Carver said.

“If successful, these attempts would have resulted in agreements between competitors which reduced price competition in the Australian flat steel market and increased prices for flat steel products which are widely used in Australia.”

“Cartels not only disadvantage other businesses which are competing lawfully, but can also lead to consumers paying higher prices.”

Carver said this was an important decision that has the potential to strengthen the ACCC’s position in future cases of attempted cartel conduct.

"This should serve as a strong warning to all businesses and individuals that even attempting to reach a price fixing arrangement with one or more competitors may have very serious consequences, on both a corporate and personal level," Carver said.

"Corporations and individuals involved in cartel conduct may face either ACCC civil enforcement action or potential criminal charges brought by the Commonwealth Director of Public Prosecutions."

This decision comes after Ellis was convicted and sentenced in December 2020 for inciting the obstruction of an ACCC investigation, as a result of his conduct encouraging two other BlueScope employees to give false information and evidence to the ACCC during its investigation of the cartel conduct.

The steel company expressed its disappointment by the decision and will be reviewing the reasons behind it and the possibility of whether there are grounds to appeal.

"“BlueScope acknowledges the decision received today. In the time since BlueScope first became aware of the conduct which led to the legal proceedings, BlueScope has implemented a number of steps to substantially strengthen its programs to enhance awareness of, and compliance with, competition law," Bluescope chairman John Bevan said.

"The Company has also made improvements to our organisational structure, internal systems and processes, training for employees, and developed in-house advisory capabilities in competition law."