The Russian Federal Antimonopoly Service (FAS) has announced that on May 21 this year it has initiated a probe into Russian mining and steel producing company Evraz for abusing its dominant position in the domestic rolled steel products market, through high, monopoly-like pricing.
The decision to initiate proceedings against Evraz was taken considering the results of market analysis carried out by FAS, and following the company's price increases for steel products in early 2010.
In addition, FAS is also investigating the reasons and dynamics of coking coal and iron ore price increases, and is carrying out an analysis of costs formation at all stages of steel production.
Hearings are expected to be heard in the case within one month from the start of investigations.
Meanwhile, according to the Evraz's statement in respect of the antimonopoly investigation, the company "has not been provided with any details of the investigation as of the current time." In addition, the company said that it will cooperate fully with the investigation, and will make a further announcement once official communications from FAS are delivered.
It is considered that the current discussion could be related to the complaint last month of Russian Railways and state-owned heavy machine building company and also the country's main battle tank manufacturer, Uralvagonzavod, following which FAS started an examination of domestic prices for steel products of major Russian steel producers, including Evraz.
The recent hike in steel prices has caused concern within the highest quarters of the Russian government. Prime Minister Vladimir Putin said it is completely unclear to him how this increase in price could happen. "The issue of raising prices on steel production should be discussed in the most serious way with our colleagues from the business community, with the sector's representatives," Mr. Putin said. "We need to look at the realities, at the structure of price formation and the other factors that influence this process," he added.
Mr. Putin pointed out that of late, with the recovery from the recession, some companies in certain industries "have an unclear desire to dramatically increase the cost of their products." "It is clear that production costs can grow and that the economic situation is developing differently, but this is not a reason for causing price surges," Mr. Putin said.