Mittal defends its new pricing model

Mittal Steel has defended its new pricing model for the domestic steel market

South African steel producer, Mittal Steel, has defended its new pricing model for the domestic steel market after it has been rejected earlier this year by the Competition Tribunal. Mittal Steel says its calculations show that the new model has passed on benefits to the local steel market to the value of some R550 million in 2006.

In a case brought by gold miner, Harmony Gold, the tribunal ruled in March that Mittal Steel has abused its dominant position in the market by charging excessive prices.

Mittal Steel told the tribunal that it has moved away from its controversial import parity pricing, setting the price of local steel slightly above the level of what it will cost to import, to a model where the price is calculated based on a basket of domestic prices in a number of other countries. The tribunal said it could not see the difference.

Mittal says various factors can influence the outcome of the new pricing model and should be calculated over a longer period. Mittal Steel has lodged an appeal against the tribunal's ruling on excessive pricing. The company could face stiff penalties if the ruling stays.