The Australian Competition & Consumer Commission said FMG chairman Andrew Forrest does not have a case to answer after comments he made about capping iron ore production.
Forrest caught the attention of the ACCC last month when he suggested iron miners should put a cap on production in order to usher in a price rise.
Forrest challenged Rio Tinto, BHP Billiton, and Vale to put a lid on their current production increases, saying if they did “we'll find the iron ore price goes straight back up to US$70, US$80, US$90”.
"I'm happy to put that challenge out there, let's cap our production right here and start acting like grown-ups," Forrest said
Just a day later, ACCC chairman Rob Sims said the cartel-like comments and the context in which they were made would be investigated.
However yesterday the ACCC said it had decided against taking any action.
“The ACCC has taken into account Fortescue’s position that Mr Forrest’s comments were made ‘off-the-cuff’ in response to audience questions, were hypothetical and intended to encourage a policy debate about the long-term future of the iron ore industry,” Sims said.
“However, it is important that the business community understands that public statements calling for competitors to agree to limit production or to raise prices may constitute a serious cartel offence.”
FMG CEO Nev Power stood behind Forrest’s comments, stating a depressed iron ore price was not in the interests of customers, shareholders of any Australian iron ore exporter, nor in the interests of the governments of Western Australia and Australia.
“Statements about future production increases as part of a market share-at-all-costs strategy are impacting sentiment that is depressing the iron ore price when the fundamentals of the market are sound,” Power said
“A strategy of concentrating market share in the hands of fewer is not good for our customers in the long run and Economics 101 tells us that it destroys shareholder value that can never be recovered.”