SynopsisRussia's Federal Antimonopoly Service continues discussions with steel companies over the unjustified inflation of steel prices in 2021. While considering a possible settlement, FAS, led by Maxim Shaskolsky, does not find grounds for imposing minimum fines due to strong financial results reported by these companies in 2022. Negotiations with steelmakers are ongoing, although they face challenges. The regulator's proposal to base steel prices on 2019 figures and tie them to raw material costs until February 2025 is one condition for potentially imposing minimum fines.ArticleRussia's Federal Antimonopoly Service is engaged in ongoing discussions with steel companies regarding the alleged unjustified inflation of steel prices that occurred in 2021. Maxim Shaskolsky, the head of FAS, has stated that despite considering a possible settlement, there are currently no grounds for imposing minimum fines on these companies. This decision is influenced by the strong financial performance these steel manufacturers reported in 2022, despite the challenging market conditions.The suggestion of imposing a "lower than the lowest" fine, which equates to 0.5% of the potential fine, was previously considered by FAS if steel companies were facing financial difficulties. However, given the positive financial outcomes of 2022, this option is no longer on the table. Instead, FAS is working towards a reduction in fines that will not fall below the statutory minimum.Shaskolsky noted that while steel companies may not fully agree with these decisions, they acknowledge the additional income they earned in 2022, further complicating the negotiations.Regarding the possibility of a settlement, Shaskolsky stated that discussions are progressing, albeit not without challenges. He added that it's possible court proceedings may conclude before the end of this year.In earlier reports from the spring of 2023, FAS proposed using the 2019 price of metal as the basis for determining the cost of hot-rolled flat products on the domestic market. This cost would be adjusted to account for changes in the companies' expenditures on iron ore and coking coal concentrate. The proposal was to peg steel prices to raw material cost changes in this manner until February 2025.These conditions were part of FAS's willingness to consider imposing minimum fines in a case where Severstal, Magnitogorsk Iron & Steel Works and Novolipetsk Steel were found to have violated antimonopoly legislation on the rolled steel market.By law, fines can range from 1% to 15% of revenue. In February 2022, FAS ruled that MMK, NLMK, and Severstal had violated antitrust law by setting and maintaining monopolistically high prices for hot-rolled flat steel on the domestic market from January 2021. The regulator emphasized that the price hikes were not solely due to market factors.All three companies were ordered to cease abusing their dominant positions and to promote competition. Disagreeing with the regulator's rulings, the companies filed lawsuits to challenge them.At the beginning of 2023, FAS confirmed in court that settlements might be possible with Severstal, NLMK, and MMK, particularly considering their financial challenges stemming from foreign countries' imposition of restrictive measures.
SynopsisRussia's Federal Antimonopoly Service continues discussions with steel companies over the unjustified inflation of steel prices in 2021. While considering a possible settlement, FAS, led by Maxim Shaskolsky, does not find grounds for imposing minimum fines due to strong financial results reported by these companies in 2022. Negotiations with steelmakers are ongoing, although they face challenges. The regulator's proposal to base steel prices on 2019 figures and tie them to raw material costs until February 2025 is one condition for potentially imposing minimum fines.ArticleRussia's Federal Antimonopoly Service is engaged in ongoing discussions with steel companies regarding the alleged unjustified inflation of steel prices that occurred in 2021. Maxim Shaskolsky, the head of FAS, has stated that despite considering a possible settlement, there are currently no grounds for imposing minimum fines on these companies. This decision is influenced by the strong financial performance these steel manufacturers reported in 2022, despite the challenging market conditions.The suggestion of imposing a "lower than the lowest" fine, which equates to 0.5% of the potential fine, was previously considered by FAS if steel companies were facing financial difficulties. However, given the positive financial outcomes of 2022, this option is no longer on the table. Instead, FAS is working towards a reduction in fines that will not fall below the statutory minimum.Shaskolsky noted that while steel companies may not fully agree with these decisions, they acknowledge the additional income they earned in 2022, further complicating the negotiations.Regarding the possibility of a settlement, Shaskolsky stated that discussions are progressing, albeit not without challenges. He added that it's possible court proceedings may conclude before the end of this year.In earlier reports from the spring of 2023, FAS proposed using the 2019 price of metal as the basis for determining the cost of hot-rolled flat products on the domestic market. This cost would be adjusted to account for changes in the companies' expenditures on iron ore and coking coal concentrate. The proposal was to peg steel prices to raw material cost changes in this manner until February 2025.These conditions were part of FAS's willingness to consider imposing minimum fines in a case where Severstal, Magnitogorsk Iron & Steel Works and Novolipetsk Steel were found to have violated antimonopoly legislation on the rolled steel market.By law, fines can range from 1% to 15% of revenue. In February 2022, FAS ruled that MMK, NLMK, and Severstal had violated antitrust law by setting and maintaining monopolistically high prices for hot-rolled flat steel on the domestic market from January 2021. The regulator emphasized that the price hikes were not solely due to market factors.All three companies were ordered to cease abusing their dominant positions and to promote competition. Disagreeing with the regulator's rulings, the companies filed lawsuits to challenge them.At the beginning of 2023, FAS confirmed in court that settlements might be possible with Severstal, NLMK, and MMK, particularly considering their financial challenges stemming from foreign countries' imposition of restrictive measures.
