British Steel hit with pounds 25m fine: MAry Fagan and Sarah Lambert report on penalties for price rigging in Europe

BRITISH Steel has been fined pounds 25m by the European Commission for breaking competition rules. The size of the fine - almost half the group's pre-tax profits in the first six months of the year - shocked British Steel, which intends to appeal. It is by far the largest of a series of penalties totalling about ecu104m ( pounds 80m) that have been imposed on 16 steel companies found guilty by the Commission of rigging the market.

Karel van Miert, the commissioner for competition policy, said in the case of British Steel, 'virtually everything that could be infringed has been infringed'.

British Steel in part bore the heaviest penalty because it is Europe's biggest beam manufacturer and the fines are allocated in proportion to product turnover. However, in setting the level the Commission also considered the seriousness of the infringement, the length of time over which it had been committed and the potential profits made as a result.

Other companies to receive heavy fines include: Unimetal - part of Usinor Sacilor, which was fined pounds 9.5m; Arbed, fined pounds 8.3m; and Siderurgica Aristrain Madrid which was fined pounds 8.2m.

Mr van Miert said that British Steel was one of a handful of steel companies singled out for repeatedly infringing the rules. 'British Steel is not taking the blame for everything. We are not pointing the finger at one or another company in this matter; we are talking about a number of companies which have been operating in this together,' he said.

The steel companies have argued that the practices date from the steel crisis of the early 1980s when the Commission sanctioned voluntary price restraints and other measures in an effort to cut production.

British Steel said last night that it had had no formal communication from the Commission and had not yet decided the basis of an appeal. Tim Sainsbury, the Industry Minister, said the Government would not intervene.

Robin Cook, Labour party spokesman on trade and industry, said: 'The steel industry in Europe is in crisis and instead of tackling that crisis the EC have just done their best to deepen it.

'At a time when the future of jobs in British Steel turns on a knife-edge, today's whopping fine could tilt the balance to more redundancies.'

Mr van Miert announced the fines within hours of a meeting between Martin Bangemann, industry commissioner, and heads of European steel companies to discuss further capacity cuts.

The European steel industry has excess production capacity of 30 million tonnes and the Commission is demanding that unsubsidised firms offer initial capacity cuts of 3 million tonnes by 22 April.

(Photograph omitted)

Leading article, page 17