By BERNAMA
Shila Dorai Raj
The Malaysian Competition Commission (MyCC) today issued a “Proposed Decision” on Megasteel Steel Sdn Bhd as the company has violated the Competition Act 2010 by abusing its dominant position with the proposed financial penalty amounting to RM4.5 million.
MyCC Chief Executive Officer Shila Dorai Raj said the commission found Megasteel’s practice of imposing a price for its hot rolled coil disproportionate to the selling price of its cold rolled coil, amounting to a margin squeeze that produces anti-competitive effects in the market, and is an infringement of section 10(1) of the Act.
“Margin squeeze is also regarded as abusive means by a dominant enterprise to leverage its market power in the upstream market to drive out the enterprise’s rivals in the downstream market,” she said in a statement today.
MyCC also views Megasteel as dominant players in the hot rolled coil market(upstream segment) and has found that the company was also involved in cold rolled coil production (downstream segment).
Hot rolled coil is an essential input for downstream manufacturers of cold rolled coil and at present, Megasteel is the only domestic manufacturer of hot rolled coil.
The MyCC also notes that the barriers to entry into the hot rolled coil market are high.
“These factors place Megasteel in a very special position in the market over all the other cold rolled coils’ producers,” she said.
Megasteel has 30 working days from the date the Proposed Decision is served to submit a written representation or indicate whether it wants to make an oral representation before the MyCC.
“The proposed financial penalty on Megasteel is less than 10 per cent of its worldwide turnover in 2012,” Shila added.
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