The Federal Antimonopoly Service of Russian Federation (FAS) has announced that it has decided in favor of application submitted by Novolipetsk Steel (
NLMK) offering to buy out the only transformer steel producer in
Russia Verkh-Isetsky Iron and Steel Works (VIZ-Stal).
The FAS's acceptance is subject to some conditions. Thus,
NLMK is obliged to supervise the fulfillment of all VIZ-Stal's long-term and short-term contacts, not to stop whole
production or
production of some type of steel at VIZ-Stal without previous notification of the FAS, to ensure enough
production capacities at VIZ-Stal to satisfy the need of transformer steel in the Russian domestic market.
In addition,
NLMK and VIZ-Stal are obligated to follow non-discriminating price policies for all customers disregarding whether the consumer is a part of
NLMK or not. Moreover,
NLMK and VIZ-Stal are compelled not to raise the price of transformer steel more than 3 percent a year in the next 20 years without prior consultancy with the FAS.
In the case of non-fulfillment of the above conditions, the FAS reserved the right to pronounce the deal on the purchase of VIZ-Stal as null.
The purchase of VIZ-Stal will cost
NLMK $550 million.