Court Upholds Record $38.5 million Penalty in BlueScope Cartel Case

Key Takeaways

• Record Penalty Upheld: The Full Federal Court confirmed BlueScope’s $38.5 million (AUD $57.5 million) fine, the highest ever for cartel conduct in Australia, and a $335,000 (AUD $500,000) penalty against former GM Jason Ellis.
• Attempted Cartel Conduct: Between 2013 and 2014, BlueScope and Ellis tried to induce eight distributors and Taiwan’s Yieh Phui to fix flat steel prices, though the collusion attempts failed.
• ACCC Stance Reinforced: Acting Chair Catriona Lowe said the decision highlights the regulator’s priority to pursue cartel cases, stressing that even attempted collusion attracts significant penalties.
• Industry Impact: Flat steel products are critical to construction, automotive, and manufacturing sectors; successful collusion could have driven up costs across the economy.
• Individual Liability: Ellis’s conviction, prison sentence (served via recognizance release), and financial penalty underscore the personal risks for executives involved in cartel activity.

Deep Dive

Australia’s competition watchdog has secured a major victory after the Full Federal Court dismissed appeals by BlueScope Steel Ltd and its former General Manager, Jason Ellis, in a landmark cartel case. The decision leaves in place the highest penalty ever imposed for a breach of Australia’s competition laws i.e., a $38.5 million (AUD $57.5 million) fine against BlueScope, alongside a $335,000 (AUD $500,000) penalty against Ellis.

The Court upheld earlier findings that between September 2013 and June 2014, BlueScope and Ellis sought to induce eight Australian steel distributors and Taiwan-based manufacturer Yieh Phui to enter agreements aimed at fixing and raising prices for flat steel products.

The conduct, according to the Court, involved Ellis and other BlueScope representatives approaching competitors and attempting to persuade them to use BlueScope’s pricing information as a benchmark for their own customer pricing. Although the attempts to collude ultimately failed, the Court found the actions amounted to cartel conduct under Australia’s competition law.

ACCC Acting Chair Catriona Lowe welcomed the judgment, noting the case underscores the regulator’s determination to stamp out collusion.

“This case involved an attempted cartel which, if successful, could have created significant damage across the economy, as well as to customers and other businesses that compete fairly,” Lowe said. “Enforcing cartel laws is an ongoing priority for the ACCC. Any business or individual that attempts to enter collusive agreements with competitors risks significant penalties, even if attempts to collude and breach competition laws do not come to fruition.”

Broader Impact on Industry

BlueScope, Australia’s largest manufacturer of flat steel products, is a key supplier to critical industries including construction, building, automotive, transport, and manufacturing. Flat steel products such as hot rolled coil, cold rolled coil, and steel plate are essential building blocks of the economy. The Court’s decision reinforces the principle that even attempted collusion in such foundational markets carries serious risks for competition and consumers.

The ACCC first launched civil cartel proceedings against BlueScope and Ellis in August 2019. Separately, Ellis was charged in October 2019 with inciting obstruction of a Commonwealth official after encouraging employees to provide false information to the ACCC. He pleaded guilty in 2020, was convicted, and sentenced to eight months’ imprisonment, though he was released on a recognizance order.

In December 2022, the Federal Court found that both BlueScope and Ellis engaged in cartel conduct. By August 2023, a $38.5 million (AUD $57.5 million) penalty for BlueScope was imposed, the highest ever ordered in Australia for cartel behavior, and $335,000 (AUD $500,000) for Ellis. Both appealed the rulings, but the Full Federal Court’s latest decision closes the door on those challenges.

For the ACCC, the case stands as both a record-setting outcome and a warning to businesses that attempts to collude are punishable, and corporate leaders face personal liability when they try to undermine competition.

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