Contingent liabilities

The case brought before the Competition Tribunal (Tribunal) by Barnes Fencing Industries Limited relating to alleged price and exclusionary conduct on the sale of wire rod is continuing in accordance with Tribunal procedures. A date for the hearing has not been set.

The Competition Commission (Commission) has referred the company and three other primary steel producers in South Africa to the Tribunal for alleged price fixing and market division in respect of certain long steel products. The Commission has recommended the imposition of a financial penalty of 10% of the company’s 2008 annual turnover. On 3 September 2010, the Tribunal refused access to the bulk of the documentation requested by the company; the company then filed a notice of appeal with the Competition Appeal Court (CAC) to review the Tribunal’s decision. The company also requested the CAC to suspend the Tribunal’s order that the company should file its answering affidavit, pending the outcome of the appeal. An appeal and review hearing was heard on 2 December 2011. The decision is still outstanding and not expected before the end of the first quarter. ArcelorMittal South Africa has also filed an application challenging the validity of the referral of this matter to the Tribunal. No date has been set for the hearing of this application.

During the fourth quarter of 2011, South Africa Revenue Services (SARS) issued a letter of assessment relating to the erroneous claiming of customs value added tax (VAT) by ArcelorMittal South Africa for the period 2005 to 2008, where it was actually relating to the wholly owned subsidiary Saldanha Steel (Proprietary) Limited, but not claimed by Saldanha. In the letter, the position of SARS is that the principal amount of R249 million should be repaid by the company and that SARS may consider imposing interest and penalties thereon, though no amount was quantified. The company issued a letter of objection to this because, in the same vein, Saldanha did not claim the input VAT, arguing that SARS was not negatively disadvantaged. The company has proposed to SARS that the dispute be advanced to a formal Alternative Dispute Resolution process. No amount has been recognised as a provision.