ArcelorMittal will spend $90 million to settle a price-fixing lawsuit that alleged U.S. steelmakers violated federal antitrust laws.
A class action lawsuit in the U.S. District Court for the Northern District of Illinois alleges ArcelorMittal, U.S. Steel and several other major steelmakers conspired to raise prices by slashing output between 2005 and 2007. AK Steel Corp., Gerdau Ameristeel Corp. and Commercial Metals Co. previously had settled for a total of $15.9 million.
"ArcelorMittal continues to strongly deny any liability or wrongdoing and believes the claims are without merit," spokeswoman Mary Beth Holdford said. "In order to avoid further costs and distraction of management resources, as well as to mitigate further risk, ArcelorMittal agreed to a settlement with the plaintiff class."
Scranton, Penn.-based metal fabricator Standard Iron Works filed the lawsuit that alleged major steelmakers agreed to restrict production to inflate prices to artificial heights. An estimated 5,500 companies — any service center, fabricator or other business who bought steel at inflated prices during that time frame — could claim part of the settlement.
A dramatic restructuring of the $80 billion-a-year industry had just taken place. Fragmentation gave way to consolidation. A series of bankruptcies, mergers and buyouts left ArcelorMittal, U.S. Steel and Nucor as the biggest players in one of the largest commodity sectors in the United States.
At the time, ArcelorMittal controlled 20 to 25 percent of the raw steelmaking capacity in the United States, which U.S. Steel accounted for 16 percent of the capacity. The other companies that already settled are much smaller.
The lawsuits alleged steel executives met at different industry conferences and discussed the need for greater pricing discipline so they would not respond to soft demand by cutting prices, starting "a race to the bottom." Instead, they hoped to improve their financial health by reducing production at marginal facilities whenever demand softened.
Mittal Steel USA, a predecessor to ArcelorMittal, reduced output to 55 percent of capacity in July 2005, the lawsuit contends. U.S. Steel went from running its mills at 90 percent capacity at the beginning of that year to a much lower 75 percent in the third quarter.
Standard Iron Works attorneys argued the metal fabricators and other buyers of raw steel were forced to pay more than they would in a competitive market because of an illegal conspiracy. The suit asks for damages, interest and attorney's fees.
Judge James Zagel ruled last week to accept the settlement, which the company had been negotiating for months, according to court documents.
ArcelorMittal agreed to help prosecute the case against steelmakers who have not settled: Nucor, Steel Dynamics, SSAB Swedish Steel Corp. and U.S. Steel. The company is bound to provide documents and witnesses to prove the alleged conspiracy.