7 steelmakers hit with 292 billion won fine for fixing prices

Seven steelmakers, including top player Posco, have been slapped with a combined fine of 291.7 billion won ($273.5 million) for price fixing, the Fair Trade Commission said yesterday.

According to the nation’s antitrust watchdog, they colluded to control prices of cold-rolled steel plates, galvanized steel sheets and color steel sheets as well as zinc surcharges in the domestic market from 2004 to 2010.

This is the first time the FTC has punished steelmakers for fixing prices of steel plates. The government previously launched an investigation into their steel bar prices.

Posco received the largest fine of 98.3 billion won, while its affiliate Posco C&C has to pay 19.3 billion won. Hyundai Hysco, part of Hyundai Motor Group, was ordered to pay 75.2 billion won, followed by Dongbu Steel (39.2 billion won), Union Steel (31.9 billion won), Seah Steel (20.6 billion won) and Seil Steel (6.8 billion won).

The FTC said it plans to file a complaint with the prosecution against six of the steelmakers, excepting only Seil Steel.

For color steel sheets, excluding Posco, six of the companies were involved in price fixing. They manipulated prices 16 times from April 2004 to June 2010, according to the FTC. The six held a combined share of 90 percent in the market for color steel plates, the FTC said.

It said executives deliberately used obscure jargon while attending clandestine meetings to further conceal their price fixing moves, and that they concealed both the purpose and results of the talks.

For cold-rolled steel plates, which are mainly used for construction materials, the FTC said that Dongbu, Hyundai Hysco and Union Steel colluded 11 times from February 2005 to May 2010.

According to the regulatory authorities, when Posco, the top player in the cold-rolled steel plate market with a 60 percent share, raises its product price, the three aforementioned companies all agreed to increase their prices by a bigger margin.

The FTC said that even though the three companies only held a combined 30 percent market share, such under-the-table maneuvering hurt small- and medium-sized construction companies.

For galvanized steel sheets, a core material for making automobiles and electronic devices, the FTC said five companies - Dongbu, Hyundai Hysco, Union Steel, Posco C&C and Seah - fixed prices 10 times from 2005 to 2010.

“They have a combined market share of 40 percent in the galvanized steel market, and their price fixing had a direct and negative effect on their rivals,” the FTC said in a statement. “They also made sure their plans were properly executed and continued long-term to limit competition.”

According to the investigation, Posco, the?world’s?fourth-largest?steelmaker by output, played an active role in fixing the “zinc surcharge,” which caused a domestic price hike in zinc-coated galvanized steel sheets.

In 2006, the price of zinc doubled on-year, but as the price of iron ore fell, the overall price of galvanized steel sheets barely changed. However, Posco and five other steelmakers adopted zinc surcharges and passed on the higher cost to consumers, the FTC said.

While others have admitted their wrongdoing, Posco and its affiliate denied being parties to the zinc surcharge scheme.

By Joo Kyung-don [kjoo@joongang.co.kr]