Scrap recyclers urge inquiry into anti-competitive pricing after tribunal exposes cartel practices

SOUTH AFRICA – South Africa’s recycling industry has called for an urgent investigation into alleged anti-competitive pricing practices in the scrap metal trade, following a recent Competition Tribunal ruling confirming collusion among major steel producers.

In a joint statement, the Recycling Association of South Africa (RASA), the Metal Recyclers Association of South Africa (MRA), and the Scrap Recycling Coalition (SRC) urged the Competition Commission to investigate the Price Preference System (PPS) for ferrous scrap metal, a policy they claim perpetuates cartel-like behaviour under government sanction.

The PPS, introduced in 2013, was designed to give local steelmakers preferential access to scrap metal at discounted prices.

However, the associations argue that the system continues to suppress market prices and disadvantage recyclers, mirroring the anti-competitive structure exposed in the Tribunal’s October 6 ruling.

That ruling found that Cape Gate, ArcelorMittal South Africa, Columbus Stainless, and Scaw South Africa had operated as a cartel when purchasing scrap metal from merchants, a violation of the Competition Act.

ArcelorMittal and Columbus admitted liability and settled with the Commission, while Scaw was granted corporate leniency. Cape Gate has since appealed the decision.

“The Tribunal’s recent ruling exposes a decade-long cartel that suppressed prices and disadvantaged recyclers,” the associations said.

“We are deeply concerned that the same anti-competitive template underpins the PPS, undermining fair market practices and stifling growth in the recycling sector.”

According to the groups, the PPS links domestic scrap prices to international benchmarks through fixed discounts and premiums, effectively capping local prices.

They also argue that PPS rules requiring sellers to cover all transport costs have distorted the market by discouraging inter-provincial trade.

“By prohibiting sellers from recovering transport expenses, buyers can issue uniform offers that render long-distance trades uneconomical,” the statement added.

The associations are urging the Competition Commission to launch an inquiry under Section 49C of the Competition Act, examining the PPS’s origins and its potential link to the prohibited pricing formula identified in the Tribunal’s ruling.

They also called for transparent consultations to prevent undue influence from former cartel participants.

The matter carries significant public interest. South Africa’s recycling sector, including the informal scrap trade, sustains an estimated 400,000 livelihoods, many of which belong to vulnerable groups.

“If the PPS continues unchecked, it risks entrenching market imbalances that harm recyclers, reduce competitiveness, and undermine the circular economy,” the associations warned.

Subscribe to our email newsletters that provide busy executives like you with the latest news insights and trends from Africa and the World. SUBSCRIBE HERE