South African government investigates import-parity pricing

South African government investigates import-parity pricing

South African government is stated to have initiated an investigation to determine the effects of import-parity pricing in the steel and chemicals sectors. The investigation is expected to bring some relief to downstream industries, which suffer from the subject pricing system. The companies practicing import parity pricing generally hold a monopoly in the sectors in which they are involved. As they set their prices according to import price levels of the products, domestic companies which depend upon these products are forced to pay these high prices, therefore downstream industries and domestic users are negatively affected from this pricing system. South African Trade and Industry Department is expected to present its report on the subject to the cabinet in January 2005. If it is proven that the subject pricing system has negative effects on the related sectors, companies using import-parity pricing will have to change their pricing policies. In the steel sector, for instance, Highveld Steel & Vanadium and Ispat Iscor, and in the chemicals industry Sasol use the subject pricing policy. As previously reported by SteelOrbis, downstream industries objecting to the pricing policy of Ispat Iscor demanded the government to intervene in Ispat Iscor's pricing policy. South African government had several talks with Ispat Iscor, however no concrete solution to the problem has been found so far. The government announced that it will either eliminate the negative effects of the subject pricing policy or will alter the policy in such a way that the policy will be acceptable for the companies practicing the policy. The government is currently investigating the effects of the pricing policy on the steel and chemicals sectors however other sectors will reportedly be dealt with soon.