‘Cartelisation’: CCP issues show cause notices to International Steel & Aisha Steel Mills

In a major development, the Competition Commission of Pakistan (CCP) has issued show-cause notices to International Steel (ISL) and Aisha Steel Mills (ASML) for their alleged involvement in cartel formation in the flat steel market.

CCP will pass a final order in the case after reviewing the written and oral arguments presented by the parties, read a statement issued on Tuesday.

The development come after an inquiry conducted by the CCP found prima facie evidence suggesting that the two leading producers engaged in price-fixing, coordinated price changes, and exchanged commercially sensitive information, in violation of Section 4 of the Competition Act, 2010.

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“The CCP initiated an inquiry in May 2021 following informal complaints regarding possible cartelization by local flat steel manufacturers. Complaints suggested that prices of flat steel products were moving in parallel, and there were allegations of an artificial shortage in the market.

“Price analysis indicated a pattern of price parallelism among the major players, with price changes occurring simultaneously and in identical quantum.

“Between July 2020 and December 2023, the prices of cold-rolled coil (CRC) increased by Rs146,000 per metric ton for ISL and Rs145,900 per metric ton for ASML, reflecting an average increase of 111%,” read the statement.

According to the statement, the CCP conducted a search and inspection at the premises of ISL and ASML on June 12, 2024.

“The impounded evidence suggests that the two companies allegedly coordinated with each other before implementing any price changes and discounts.”

The inquiry report found that ISL and ASML also exchanged commercially sensitive information on raw material purchase prices, allowing them to align their final product pricing.

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Flat steel products, including Cold Rolled Coil (CRC) and Galvanized Coil (GC), are widely used in various industries such as electronics, automotive, agriculture, and manufacturing.

“Any anti-competitive behaviour in this sector has far-reaching implications, affecting industrial costs and consumer prices,” it said.

The CCP’s investigation, however, found no evidence of collusive activity by the smaller local competitor, Hadeed Pakistan Limited (HPL).