ARC Manufacturing Limited (ARC) has filed a complaint with the Fair Trading Commission (FTC) against its competitor Tank-Weld Metal (Tank-Weld) alleging it is employing “predatory pricing” tactics that are tantamount to an “abuse of dominance” in the steel market, and has asked the competitions custodian to launch an investigation into the matter and make a ruling.

ARC in its complaint, a copy of which has been seen by the Jamaica Observer, said it has been aware since January of this year, that Tank-Weld has been selling rebar — the type of steel used in block and steel construction in Jamaica — “significantly below their actual United States dollar cost price” in Jamaica.

ARC said as an importer of rebar itself, it knows the average supply cost for the steel, including insurance and freight (CIF), is approximately US$610 per metric tonne. Other costs such as those for customs and clearance, port, cargo lifting, warehouse and delivery costs, then pushed the ex-warehouse price closer to about US$677 per metric tonne before the cost of financing. But ARC said based on feedback it has been getting from retail hardware suppliers, Tank-Weld has been selling the steel for US$650 per metric tonne in Jamaica, while it sells the same steel in other islands for US$750 per metric tonne. ARC said Tank-Weld’s dual pricing strategy “is indicative of its predatory intent aimed at eliminating local competitors and the strategic manipulation of the Jamaican steel market” with the ultimate aim being to monopolise the market to the detriment of consumers.

Tank-Weld commands about 75 per cent of the steel market according to the complaint to the FTC while ARC supplies the other 25 per cent.

“We believe that in every industry there will always be a dominant player, and nothing is wrong with that. But what is wrong, is the abuse of dominance. So what we are fighting for is to end the abuse of dominance and also to ensure that we can have fair, competitive trade,” Norman Horne, executive chairman of ARC Manufacturing, told the BusinessWeek in a brief telephone conversation about the complaint.

The complaint also alleges that other companies have tried to enter and/or remain in the market over the years but have been forced to exit because of the predatory pricing strategy Tank-Weld has employed “from time to time.”

It added that Tank-Weld’s control of a sufferance wharf in Rio Bueno, Trelawny, also contributes to its market control by giving it certain advantages that other players cannot access. It also wants the FTC to look into the operations of the wharf to see if Tank-Weld is using it to bring in goods its licence does not allow it to bring in.

“This makes it even more necessary for the company to be under the close watch of the [FTC] and for there to be a thorough investigation of the company’s pricing strategies which…constitute a clear abuse of Tank-Weld’s dominant position which is distorting the market,” it’s complaint continued.

ARC said it has been losing market share because of the pricing tactic, and though it has been reducing its prices to compete and survive, it is still facing “an eventual exit from the market if there are no remedial measures.”

“If the FTC investigations finds [Tank-Weld] guilty of abuse of dominance, then our next course of action is to sue them for damages in the courts of Jamaica,” Horne continued without quantifying how much damages he may seek. But he said ARC will be investing heavily in the matter and is even prepared to go to the Privy Council in London if necessary, to get a fair ruling.

“If they were to drive us out of the steel market, they can turn around and drive us out of the lumber market and drive us out of every market, so we can’t give up any of our markets. There are only two entities, us and them, so once they drive us out they are the only ones and can move prices upwards [injuring consumers].”

This, ARC warns, will have a deleterious effect on the construction industry and will eventually stymie the Government’s development plans across the island.

Horne said he tried to have dialogue about the pricing strategy as late as January of this year but has not been able to come to a favourable agreement, hence the push to have an independent arbitrator investigate its claims.

It said it is also aware that previous complaints against Tank-Weld did not result in any adverse findings.

“We trust that there will be a thorough investigation as even though we accept that each complaint must be based on the results of the particular investigation, a repeat complaint in our view should cause there to be enhanced diligence in the investigation. Should the investigation confirm the abuse of dominance, we request that appropriate remedial measures be taken to restore fair competition,” ARC’s attorney Symone Mayhew, KC, of Mayhew Law said in the complaint.

The BusinessWeek reached out to Chris Bicknell, CEO of Tank-Weld Metals about the complaint and was told he has not seen it as yet and so could not provide a response.

Bicknell however said similar complaints have been brought against Tank-Weld in the past and the FTC’s investigation found it not to be in breach of the Fair Competition’s Act. He said Tank-Weld continues to pursue its business model that has driven it success to become a household name, and to have earned a highly regarded reputation for giving back and supporting communities since its inception 35 years ago.