The Commission says it has evidence of a price-fixing cartel among 17 European makers of steel beams and will announce punitive fines today.
European Union sources yesterday suggested that the levy on British Steel could be as high as pounds 7m. Under EU law, the Commission may fine a company up to 10 per cent of its annual turnover, but has never done so.
The decision is politically fraught, given the crisis in Europe's over-productive steel industry. The Commission was due to meet late last night to set the fines, which will be formally approved by the 12 commissioners at their weekly meeting today.
The EU's Competition Commissioner, Karel van Miert, and the Industry Commissioner, Martin Bangemann, prepared to host a dinner for the heads of Europe's leading steel companies, including British Steel's chairman, Brian Moffat, to put greater pressure on them to cooperate in implementing the Commission's restructuring plan.
A British Steel spokesman said: 'The timing of the Commission's announcement is certainly interesting, given that the findings of the inquiry have been available for some time. I do not think we would be happy to think they were using the sledgehammer of hefty fines in an unrelated pricing case just to bring in capacity cuts - because we have done our bit on that front.'
It is a year since the Commission first announced a restructuring plan that has so far spectacularly failed to deliver the production cuts required to rescue the industry from the combined effects of recession, military cutbacks, competition from the East and over-production.
Last December, EU industry ministers formally approved pounds 4.7bn of state subsidies to state-owned steel makers in return for promised capacity cuts.
Implementing this package has proven increasingly difficult. Last month, Mr van Miert warned that the plan was in danger of collapsing. The private steel makers are unwilling to make cuts while, as they argue, the state-aid deal will actually increase capacity in some state-owned producers, in countries such as Spain and at eastern Germany's Eko Stahl plant, which has just been sold to a private-public sector consortium, although it was to have been closed under the EU restructuring plan.
British Steel complained that the cartel investigation dates back to the last steel crisis, when the Commission's industrial directorate sought remedy in allowing voluntary price restraints and pricing agreements.
The company's spokesman said: 'As far as the industry directorate was concerned long-term restructuring was fine, but the competition directorate seems to have assumed all pricing agreements amounted to 'fixing', which is not the case.'