Scrap Metal Cartels Facing Global Scrutiny

A worldwide antitrust crackdown on scrap metal cartels has landed in Korea with the Korean Fair Trade Commission’s recent imposition of a $1.45 million fine against 25 scrap metal processors for price fixing.

Scrap metal processors purchase the scraps that are produced by the steel production process.  The processors in turn sort and clean the scrap metal and sell the final product to end users, frequently other steel mills.  Because of its enforcement action, the Korean Commission expects prices paid by end users to fall in the near future.

The scrap metal industry has also been the focus of antitrust claims in the United States. For example, the Court of Appeals for the Sixth Circuit upheld a $23 million jury award against three scrap metal processors in 2008.  Plaintiffs in that case, In re Scrap Metal Antitrust Litigation, accused the defendants of bid rigging and market allocation, among other charges.  The U.S. Department of Justice also brought criminal charges against two scrap metal dealers for price fixing, but the companies were acquitted in 2009.

Korea and the United States are not alone in closely scrutinizing the scrap metal industry.  Earlier this year, South Africa’s Competition Commission announced it was referring an investigation into 13 scrap metal processors to its Competition Tribunal.  The decision concerns various charges, including price fixing, market allocation, and bid rigging.  The referral followed a four-year investigation into the South African scrap metal industry.