Watchdog probes scrap metal buyers in Gauteng for suspected cartel behaviour

Stephen Grootes speaks to Makgale Mohlala, manager of the Cartels Division at the Competition Commission about the Competition Commission’s sweeping search and seizure raids on major scrap metal buyers.

Listen to the interview in the audio player below.

The Competition Commission of South Africa carried out search-and-seizure raids at four scrap metal buying companies in Gauteng on Friday as part of an investigation into possible price fixing.

The competition watchdog says its suspects multiple companies coordinating the prices they pay for shredded or processed scrap metal. If found guilty, the companies could face heavy fines.

According to the commission, the firms allegedly announced price changes of the same amount at roughly the same time, an indication of a pattern that may suggest collusion.

These companies buy processed scrap metal, which they use to produce long steel products such as bars and rods used in construction.

Authorities have long been concerned about the scrap metal trade, particularly the widespread use of cash transactions. These cash deals can make it easier to launder money and trade stolen materials.

Speaking to Stephen Grootes on The Money Show,  Makgale Mohlala, manager of the Cartels Division at the Competition Commission says such unethical practices can have far reaching consequences for the metal industry.

"The merchants that supply scrap metal, really don't have bargaining power. The buyers of the scrap metal have the power to determine the price at which they want to purchase the scrap metal. So what they do, is that they coordinate the price..."

- Makgale Mohlala, manager - Cartels Division at the Competition Commission

"They are big players in production of long steel, which is what they produce from scrap metal. So they're big purchases of scrap metal. Absent the, you would not be able to sell your scrap metal."

- Makgale Mohlala, manager - Cartels Division at the Competition Commission

"They announce the decreases at more or less the same time, with exactly the same amount. All of them have been reducing what they pay for scrap metal, with exactly the same amount, for the same period."

- Makgale Mohlala, manager - Cartels Division at the Competition Commission

Scroll to the top of the article to listen to the full interview.