CAIRO: The Egyptian Competition Authority (ECA) denied news reports that it will finalize Tuesday findings into the steel monopoly case filed two years ago.
This news is incorrect. We don t announce the dates of our meetings in advance . because they can get postponed for any reason, said Ibrahim Abdel Rehim, press officer at the ECA.
However he revealed that the authority will hold a meeting revealing the final investigation results very soon.
The findings of investigations in steel monopoly charges were due last December, but have been delayed since then, which triggered speculation that Egypt s giant steel producer Ahmed Ezz – one of the leading members of the ruling National Democratic Party – might be using his political ties to close the current investigation.
In July 2006, the ECA began investigations on both the cement and steel sectors upon receiving a request from Minister of Trade and Industry Rachid Mohamed Rachid, as suspicions of practicing monopoly and gratuitously raising prices surrounded market players.
Based on thorough investigations, the ECA reported existence of a cartel among cement companies that monopolized the market, conspired to raise prices, and at times restricted production of the commodity. The authority finalized its cement investigations in 14 months as opposed to the still ongoing two-year steel probe.
The steel market is larger than that of the cement, and it is normal to take a longer time to finalize our investigations. Every case has its own circumstances, Abdel Rehim previously told Daily News Egypt.
Meanwhile, spiraling steel prices have triggered a public outcry in recent months, with experts saying that producers gratuitously doubled prices on the market. So far, steel prices have surged almost 100 percent over last year’s prices, according to sector analysts.
El Ezz Steel Company, Egypt s largest steel company by market value, has been steadily raising prices since October. The latest hike was this July when the company mounted its consumer prices to LE 6,560 per ton up from LE 5,990. This is the company’s fifth price increase since the beginning of the year.
The company holds more than a 62 percent market share, and therefore, any price hike heavily impacts local consumption.
Based on Beltone Financial data, El Ezz Steel Rebars has been increasing prices since 2008 in order to absorb a 70 percent increase in global prices of iron ore, which it estimates will soar an additional 20 percent this year.
The regional investment bank indicated that El Ezz Steel is able to further hike prices each month without adversely affecting its sales because steel market in emerging economies remains very tight in favor of steelmakers.
“El Ezz Steel would be able to make additional increases in selling prices if it is forced to pay an even higher price for iron ore, Beltone noted.
El Ezz Steel officials have repeatedly justified domestic upsurges in their prices to leaps in international markets and rises in prices of raw material, which “directly affected production costs.
The company posted a record first-quarter net profit this year, up 56 percent from the previous quarter. Based on the company s recent financial results, first quarter net profit after tax and minority interests soared to LE 436 million ($81.7 million). The company stated net sales rose 35 percent at LE 5 billion, driven by sales of flat products, which are mainly exported. Flat steel sales surged 58 percent to LE 1.94 billion. Sales of long steel products, mainly sold in Egypt, gained 24 percent to LE 3.05 million.
On the other hand, relentless leaps in local steel prices prompted the ministry to pass new rules last June that stipulate that local steel producers report prices at the start of each month and quote a resale price ceiling to their distributors, retailers and consumers so the ministry can monitor price manipulation.
According to the amended version of the anti-monopoly law passed by the People’s Assembly (PA) last June, monopolistic business practices are now fined between LE 100 million and LE 300 million. Initially, the ministry, in cooperation with the ECA, recommended a penalty between 10 or 15 percent of the company’s profits. However, the NDP – led by Ahmed Ezz – vetoed the proposal and the Parliament passed the current fines.
The newly passed law also did not stipulate a leniency clause that exonerates the first to report a cartel from all charges. Instead, an individual/corporate that reports price-fixing allegations will be charged half the fine paid by the accused corporate.
The amendment was met with severe criticism from opposition MPs, explaining it would stop anyone from reporting monopolistic practices.
However, Ahmed Ezz justified passing that clause as necessary to prevent any false accusations that could jeopardize steel producers business.