FAS permits purchase of VIZ-Stal

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.