Federal Anti-Monopoly Service Opens Investigation of Mechel

The Federal Anti-Monopoly Service on Tuesday said it was bringing a price-fixing complaint against Mechel, the country's biggest coking coal producer.

The service said in a statement it had found evidence of monopolistic activity by Mechel affiliates Southern Kuzbass, Yakutugol and Trade House Mechel.

Mechel said it knew nothing about the purported violations.

The service also said it had evidence that Mechel subsidiaries had without good reason stopped supplies of coal concentrate to Novolipetsk Steel and refused to sign a supply contract with the same firm.

No one at Novolipetsk Steel, the country's fourth-largest steelmaker, responded to requests for comment Tuesday.

Sources at a company that buys Mechel's coking coal confirmed late Tuesday that there were problems with unexpected suspensions of supplies and price-fixing.

The anti-monopoly service was not immediately available for further comment.

By law, price-fixing violations are punishable by a fine of 1 percent to 15 percent of a company's profits gained from those sales, said Vladimir Skrynnik, a partner at legal firm Jus Privatum.

Mechel spokesman Ilya Zhitomirsky said Tuesday that the firm had not heard of any pricing complaints from its customers.

"We haven't received any official documents about the case, and we don't know who filed the complaints," he said by e-mail, adding that the complaints would be judged on their merits.

Mechel's first-quarter net profit rose 162 per cent year on year to $500 million as global coking coal prices rose more than 200 percent to reach $300 per ton.

Mechel's biggest rivals in coking coal production are Evraz Group's Raspadskaya and Yuzhkuzbassugol units.