FAS RECOGNIZED VIOLATION IN HOT-ROLLED FLAT PRODUCTS MARKET

Such decisions were made today by the Commission of the FAS Russia

On February 10, 2022 after a comprehensive study of the circumstances of the cases and evidence, the FAS completed consideration of cases on violation of antimonopoly legislation against Magnitogorsk Iron and Steel Works PJSC, Severstal PJSC, Novolipetsk Metallurgical Combine PJSC.

Since January 2021, the companies have established and maintained monopolistically high prices for hot-rolled flat products in the domestic market.

The market of hot-rolled flat products is characterized by a stable composition of the main players and high entry barriers. The defendants occupy a dominant position with a share of more than 70%.

The Commission found that the increase in prices for hot-rolled products in the domestic market in 2021 was not fully due to market factors.

Firstly, the growth in hot-rolled products occurred at a faster pace than the growth in cost. The companies referred to the fact that the prices for hot-rolled products were set by the buyers themselves. According to metal producers, the buyer can reduce the price through negotiations and set the price on the market that he is willing to pay. However, this argument is refuted by the number of statements received by the department about an unjustified increase in prices for hot-rolled flat products.

Secondly, an assessment of the general conditions of circulation of goods on the market showed that there was no increase in demand from Russian consumers. With unchanged sales volumes in the domestic market in 2021, the defendants increased their profits three times compared to the indicators of 2019-2020.

Besides, metal producers could not confirm the unsatisfied demand from foreign contractors, which indicates the absence of market factors for the growth of domestic prices to the level of export values. Thus, the increase in prices by companies dominating the domestic market solely on the basis of the values of foreign quotations violates Part 1 of Article 10 of the Law on Protection of Competition, as it can lead to negative consequences in the domestic market.

Severstal, MMK and NLMK have been issued orders to stop abusing their dominant position and take actions aimed at ensuring competition. Based on the materials of antimonopoly cases, cases of administrative violations will be initiated and fines will be calculated for each company.

For reference:

Paragraph 1 of the Part 1 of the Article 10 of the Law on Protection of Competition prohibits the actions of an economic entity occupying a dominant position, the result of which is or may be the prevention, restriction, elimination of competition and (or) infringement of the interests of other persons, including the establishment, maintenance of monopolistically high or monopolistically low prices of goods