The Competition Commission has conducted search-and-seizure operations at the Gauteng premises of four scrap metal purchasing companies as part of an investigation into alleged price fixing in the sector.
The regulator believes Scaw South Africa, Cape Gate, Shaurya Steel and Unica Iron and Steel may have coordinated the purchase price of shredded or processed scrap metal used in the production of long steel products.
The commission indicated that the firms are suspected of announcing price adjustments of similar amounts at roughly the same time, raising concerns of coordinated conduct in contravention of the Competition Act. If found guilty, the companies could face administrative penalties of up to 10% of annual turnover.
The investigation follows a complaint lodged three years ago. The commission obtained a warrant from the Pretoria High Court to carry out the raids, signalling the seriousness of the probe. The regulator has identified industrial intermediary products, including scrap metal, as a priority enforcement area, given their role in downstream manufacturing and infrastructure development.
Cape Gate confirmed that officials from the Competition Commission conducted an unannounced visit to its premises as part of a broader industry inquiry initiated after what it described as unsubstantiated third-party complaints in 2023. The company said it had cooperated fully with the Commission and had already provided all requested information and documentation in 2025, arguing that there was no need for a search operation. Chief executive Dorothea Ziegenhagen said the company takes compliance with the Competition Act 89 of 1998 seriously and strongly denies any wrongdoing.
Cape Gate further stated that it believes the search warrant is unlawful and intends to launch urgent proceedings to have it set aside, contending that the order was granted in its absence and that the Commission failed to make full disclosure to the court. The company also noted that it has instituted review and appeal proceedings against a separate 2025 Competition Tribunal decision relating to scrap purchasing between 2000 and 2008, with the matter set to be heard in the Competition Appeal Court in the first quarter of 2026.
The scrutiny comes at a fragile moment for South Africa’s long steel industry. ArcelorMittal South Africa recently closed its unprofitable long steel division, underscoring pressure in a market grappling with weak domestic demand, rising input costs and competition from imports. Scrap metal is a key feedstock for electric arc furnace production, making pricing transparency critical to the competitiveness of steel producers.
Policy interventions have intensified in recent years. In late 2024, government introduced a temporary ban on scrap metal exports as part of efforts to curb infrastructure theft, which authorities estimate costs the economy tens of billions of rand annually. The Department of Trade, Industry and Competition has previously quantified the damage from metal theft at about R47 billion a year, affecting rail, electricity and telecommunications networks.
Regulatory oversight has also expanded to trade controls. The International Trade Administration Commission revised the scrap metal price preference system, reducing the mandatory discount offered to domestic buyers from 30% to 25%, while moving to restrict cash transactions in the sector. These measures form part of broader attempts to formalise trade in scrap and limit illicit flows, particularly after South Africa’s removal from the Financial Action Task Force grey list.
Authorities have further required scrap dealers to register and maintain tax compliance to limit criminal activity in the supply chain. The Competition Commission’s latest action adds an antitrust dimension to these reforms, signalling a coordinated enforcement approach spanning trade policy, financial regulation and competition law.
The outcome of the investigation may have implications beyond the companies involved. The scrap metal market underpins construction, manufacturing and infrastructure repair, sectors already under strain from slow economic growth. The commission has indicated that eliminating anti-competitive conduct would lower barriers to entry and potentially improve access for smaller firms and historically disadvantaged businesses.
The probe is ongoing, and the regulator has not yet reached findings.
This article has been updated with Cape Gate’s comment.