The Competition Tribunal has found Cape Gate guilty of participating in price-fixing in the scrap metal market. Scrap metal, which includes waste metal from cans, household appliances, and other metal items, is a key input in the production of steel products by companies like Cape Gate.

The tribunal found that the company and other large buyers of scrap entered into an agreement to fix the purchase price of scrap metal.

The Competition Commission had submitted that the firms operated as a buyers’ cartel, working together to use the same pricing formula and premium when buying scrap metal from merchants.

News24 reports that it contended that collective negotiations by competitors to directly or indirectly agree on a purchase price for scrap, in contrast to individual and independent negotiations between each of them and each of the scrap merchants, are prohibited by the Competition Act.

The other respondents were ArcelorMittal SA, Columbus Stainless, and Scaw SA.

ArcelorMittal and Columbus both admitted liability and concluded settlement agreements with the Competition Commission, which were later confirmed by the tribunal.

Scaw was the corporate leniency applicant, meaning it voluntarily confessed its involvement in the cartel in return for immunity. 

Cape Gate denied the allegations, but the tribunal dismissed its defences. Further proceedings in relation to remedies will be determined in due course, the tribunal said.

News24 notes that Cape Gate chairperson Oren Kaplan said the company is ‘extremely disappointed’ with the finding and noted that the matter was argued in mid-2019 and the tribunal took more than six years to produce a decision

‘The tribunal failed to take any cognisance of the fact that the pricing formula in issue was the outcome of transparent negotiations between the scrap buyers and the scrap merchants. It was not imposed by the scrap buyers, including Cape Gate,’ Kaplan said, adding that both the Department of Trade & Industry and the Competition Commission were fully aware of these negotiations and the pricing formula, which were aimed at keeping scrap within SA for the benefit of the country’s steel consumers.

Full News24 report