December 03, 2008

ArcelorMittal SA pulls back from Duferco Steel Processing merger plan

South African Competition Commission last week said that ArcelorMittal Steel Company has withdrawn its proposed merger with Duferco Steel Processing. Commission welcomed the withdrawal as it said it would support the tribunal's efforts to ensure that exported product was available to local customers with prices approaching export prices.

Because Duferco Steel Processing represented a source of competitive rivalry to ArcelorMittal SA in the cold rolled coil galvanized products markets, the commission said that the Duferco transaction would be a move in the opposite direction to that of improving competitive outcomes. The Competition Commission said that “The merger represented a substantial prevention or lessening of competition.”

ArcelorMittal had proposed to buy 50% of Duferco Steel Processing from Switzerland's Duferco Group, plus the remaining 50%, which is held by the Industrial Development Corporation.

The transaction was to have been considered next month by the country's highest competition authority, the Competition Tribunal, after the commission recommended in September last year that the deal be blocked.

A commentator familiar with the deal said that Mittal 's decision to end the merger application might have been prompted by the commission's finding, as the assessment had opened the possibility for further investigation and sanctions if the group was found to have circumvented conditions the tribunal had imposed on it.