June 28, 2010 / 3:43 PM / 10 years ago

UPDATE 1-EU to fine steel cartel for price fixing-sources

* ArcelorMittal has confirmed its units were probed by EU

* Fines for illegal price-fixing due on Wednesday

* Lower penalties expected for crisis-hit companies

* Around 40 companies were originally charged

* ArcelorMittal shares up 2.5 percent, market 1.9 percent up

(Adds ArcelorMittal shares, lawyer comment)

By Foo Yun Chee

BRUSSELS, June 28 (Reuters) - European Union antitrust regulators will this week fine steel companies, including world leader ArcelorMittal ISPA.AS, for operating a cartel, two people with knowledge of the matter said on Monday.

In October 2008, the European Commission, the EU’s antitrust watchdog, charged several companies with illegally fixing prices. The unidentified companies make wire rods used in prestressing steel for constructing balconies and foundation piles.

“The prestressed steel cartel (fining) decision will be on Wednesday,” one person familiar with the process said.

ArcelorMittal said in February 2009 the European Commission had investigated three of its units and two former units for possible anti-competitive behaviour.

ArcelorMittal declined to comment on Monday.

The company has said it will indemnify the current owners of Emesa and Galycas, which it sold in 2004, from any possible fine. ArcelorMittal shares were up 2.5 percent by 1506 GMT, outperforming a 1.9 percent rise in the Stoxx Europe 600 basic resources index .SXPP.

The EU executive’s so-called statement of objections or charge sheet listed around 40 companies, with many of them based in Italy, Spain and Austria, the second person said.

The Commission, which can fine companies up to 10 percent of annual sales for breaching EU rules, is expected to reduce the penalties for crisis-hit companies.

Antitrust lawyers say the regulator needs to strike a balance between promoting competition and punishing offenders.

“If the endgame is all about increased competition, it would be perverse to levy a fine of such magnitude that it would result in market exit and greater market consolidation,” said Peter Alexiadis, a partner at Gibson Dunn.

“Having said that, would anyone be surprised if that argument were to be more often cited — and better received — at a time of serious economic recession?” he said.

Last week, the watchdog cut fines by between 25 percent to 50 percent for five companies charged in a bathroom fittings cartel because of their financial difficulties. (Editing by Luke Baker and David Cowell)

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