FAS started investigating the largest metallurgical companies in Russia

FAS has exposed elements of violating the antimonopoly law on the armature market. The regulator is investigating “EVRAZ ZSMK”, “Severstal”, “ChMK” [“Mechel”] and commercial intermediaries of these companies.

The Federal Antimonopoly Service (FAS Russia) opened a case against “Severstal” PJSC,  “Severstal Distribution” JSC, “ChMK” PJSC [“Mechel”], “Mechel-Service” Ltd., “EVRAZ ZSMK” JSC and “Evraz Holding” TK” Ltd. upon elements of violating the antimonopoly law. FAS suspects the companies abused their dominance (Clause 1 Part 1 Article 10 of the Federal Law “On Protection of Competition”).

According to Deputy Head of FAS Department for Industry Control, Dmitry Chuklinov, an analysis of ex-works prices of commercial intermediaries showed that in January – April 2016 the costs of armature produced by “EVRAZ ZSMK” JSC went up by 34%, “Severstal” PJSC – by 103%. In December 2015 – May 2016 prices for similar products of “ChMK” PJSC [“Mechel”] demonstrated 70% growth.

“EVRAZ ZSMK”, “Severstal” and “ChMK” [“Mechel”] are monopolists on the market of steel bars for reinforcing standard and pre-stressed concrete constructions. The companies sell a considerable part of their products through trade agents – members of their groups of persons: “Evraz Holding” TK”, “Severstal Distribution” and “Mechel-Service”.

“The growth of armature prices in April 2016 exceeded the growth of the costs necessary to manufacture and sell the products. Therefore, FAS suspects that the companies fixed monopolistically high prices for their products”, said FAS representative.

The case against “EVRAZ ZSMK”, “Severstal”, “ChMK” [“Mechel”] and commercial intermediaries of these companies is opened upon monitoring, carried out by FAS on a regular basis. Also FAS received petitions from physical persons and economic entities about increased costs of metal products.  FAS noticed an upward trend in the number of such petitions in QII 2016 that mainly concerned a sharp increase of prices for those goods.