bold spirit - ArcelorMittal South Africa

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ArcelorMittal South Africa
Annual Report 2010
Group
2010
Rm
2009
Rm
2010
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Company
2009
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30. CONTINGENT LIABILITIES
Contingent liabilities at the statement of financial
position date, not recognised in these financial
statements, are:
• Face value of financial guarantee contracts
issued in the normal course of business
from which it is anticipated that no material
liabilities will arise 1 4 24 44
Total 1 4 24 44
Alleged contravention of the Competition Act referred by the Competition Commission to the Competition
Tribunal
Two actions have been referred by the Competition Commission (the “commission”) to the Competition Tribunal (the
“tribunal”), which remain unresolved at 31 December 2010:
• the Barnes Fencing complaint lodged with the competition authorities; and
• alleged prohibited practices in Long Steel Products, including reinforcing rebar, wire rod and sections (“Long Steel
Products matter”).
In both instances, the litigation processes have not progressed far enough to allow for an assessment
to be performed of the amount at risk, if any, and the probability of its realisation.
Barnes Fencing Industries Limited
The case brought by Barnes Fencing Industries Limited (“Barnes Fencing”) before the tribunal, alleges that the
company's pricing practices involving low-carbon wire-rod products amounted to price discrimination.
It is alleged that the company charged the complainants substantially more for the product and that other
respondents also benefited from more favourable payment terms. Barnes Fencing applied for orders against the
company to terminate these practices and further applied for the imposition of an administrative penalty of 10% to
be levied on the 2006 local revenue of low-carbon wire-rod products.
The case before the tribunal is likely to be heard during the first quarter of 2011.
Based on the current status of the litigation process, no provision has been raised and no contingent liability
quantified.
Long Steel Products matter
The Commission investigated ArcelorMittal South Africa, together with four other primary steel producers in South
Africa, in respect of alleged market collusion and price-fixing relating to certain long steel products.
The allegations concern alleged possible contraventions of section 4(1)(b) of the Competition Act. The commission has
requested that the tribunal impose an administrative penalty of 10% of the company’s 2008 revenue.
In order for the company to appropriately plead to the allegations by submission of an answering affidavit,
it submitted on 17 December 2009, an application to the tribunal for information and documents from the
commission relating to the allegations, including documents from the leniency application upon which the
commission relies in its referral to the complaint to the Commission.
On 3 September 2010 the tribunal refused the bulk of the documents requested by the company, and in response
ArcelorMittal South Africa filed a notice of appeal and an application to review the tribunal’s decision at the
Competition Appeal Court. An application has also been filed to suspend the tribunal’s order that the company
should file its answering affidavit pending the outcome of the appeal before the Competition Appeal Court. A date
for the hearing of the appeal and applications is awaited.
Based on the current status of the litigation process, no provision has been raised and no contingent liability
quantified.