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CAD investigating VSA for price fixing
The Competition Administration Department (CAD) under the Ministry of Industry and Trade (MOIT) is investigating members of the Vietnam Steel Association (VSA) for possible violations of the Competition Law.
In an attempt to prevent steel prices from sliding dramatically in the last months of the year, VSA’s members have agreed to keep the steel price stable at VND13.5-14mil/tonne. The agreement was reached at a meeting of the steel companies’ directors in Hanoi on October 7.
Explaining the agreement, VSA said that its members are striving to rescue themselves from bankruptcy as steel prices have been falling below production costs. Four steel mills halted production at the beginning of September, while others have been operating perfunctorily as supplies have been in excess and products left unsold.
Steel enterprises had the inventory level of 360,000 tonnes of finished steel and 500,000 tonnes of ingot steel by October 7, worth $1bil.
On October 15, CAD began an investigation to find out if VSA was violating the Competition Law. If VSA cannot prove that it did not violate the law, CAD will take necessary measures so that the price defining by VSA’s members will not affect the steel market and consumers’ benefits.
Pham Chi Cuong, VSA Chairman, told Thoi bao kinh te Saigon newspaper on October 15 that VSA well knows that steel companies are not allowed to cooperate with each other to set prices. However, he said that the regulations should not be applied in such a mechanical way.
Cuong said that domestic steel mills have been incurring big losses which cannot be offset even with the very high profit they got in the first six months of the year.
“Currently, sale prices are VND5-6mil/tonne lower than production cost. If steel mills still try to lower sale prices to boost sales, a lot of them will go bankrupt, thus badly affecting the entire steel industry,” Cuong said.
He added that VSA thinks that the most important thing for now is to save the steel industry. VSA will have to explain its behaviour to CAD for the department’s final decision.
The Vietnam Banking Association also once released a document setting the ceiling interest rate for its member banks. The action faced strong opposition and was accused of violating the Competition Law. The association later had to remove the ceiling level.
VNN
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