By Tyla Lee Coertzen and Courtney Kaplan

On 13 February 2026, the South African Competition Commission (“SACC”) released a Media Statement (the “Statement”) indicating that it had carried out several search and seizure operations at four scrap metal purchasing companies in Germiston, Nigel, Vanderbijlpark, and Hammanskraal.

The SACC initiated the dawn raid investigations upon grounds of reasonable suspicion that the four companies – namely, Scaw South Africa (Pty) Ltd (“Scaw”), Cape Gate (Pty) Ltd (“Cape Gate”), Shaurya Steel (Pty) Ltd t/a Force Steels (“Force Steels”), and Unica Iron and Steel (Pty) Ltd (“Unica”) – were involved in fixing purchasing prices of shredded or processed scrap metal, used in the manufacturing of steel products, which may amount to a contravention of section 4(1)(b)(i) of the Competition Act 89 of 1998 (the “Act”).

Section 4(1)(b)(i) of the Act prohibits agreements made between competitors, or concerted practices by competitors, including directly or indirectly fixing purchase prices or trading conditions. Firms who are found to be in contravention of section 4(1)(b)(i) may be liable to pay penalties of up to 10% of their annual turnover.

In terms of the Statement, the companies are suspected of having announced their price adjustments of the same prices, to be executed around the same time. The SACC alleges that this conduct amounts to a contravention of section 4(1)(b)(i) of the Act, which prohibits hardcore cartel conduct. The SACC’s investigation is said to have been brought about by a complaint submitted by a third-party in 2023, as well as a complaint initiated by the SACC in February 2026.

Section 48 of the Act empowers the SACC to conduct search and seizure operations and collect documents which concern an ongoing investigation. In respect of the scrap metal dawn raids that took place on 13 February, SACC provided that it received a search warrant from the North Gauteng (Pretoria) High Court authorising it to carry out these operations. The SACC further indicated that documents and electronic data will be seized and analysed with other relevant information to establish whether the companies are engaged in conduct which contravenes the Act.

Search and seizure operations are also known as “dawn raids” and are often initiated at the start of an investigation, usually before the respondents are aware they are under investigation, to enable the SACC to obtain the information before it might be destroyed. These inspections often come as a surprise to parties and are done in an effort to obtain evidence of potential infringements of the Act. The SACC, often accompanied by the South African Police Service, is provided wide powers for search and seizure through dawn raids, and would be entitled through a warrant to inspect company records, employee records, and both company and personal electronic devices.

Cape Gate responded to the allegations stating that it believes the search warrant is unlawful and that it plans on instituting legal proceedings to have the warrant set aside. The warrant was granted ex parte, meaning it was granted in the absence of the affected parties, and thus Cape Gate believes it has the right to institute proceedings against it. Cape Gate alleges that the SACC did not disclose all the necessary information to the Court when it applied for the warrant. Dorothea Ziegenhagen, the CEO of Cape Gate, stated that the company denies any wrongdoing and asserts that its operations fully adhere to competition law.

Interestingly, in 2025, the Competition Tribunal found Cape Gate guilty of being involved in the fixing of prices in the scrap metal market. Cape Gate denied this and has stated that the calculation was decided on in terms of transparent negotiations between buyers and merchants and has maintained that the SACC and Department of Trade and Industry knew of the negotiations and failed to acknowledge such. Cape Gate lodged an appeal with the Competition Appeal Court which is expected to be heard by the end of March 2026.

Commissioner of the SACC, Doris Tshepe, had indicated in a statement that the scrap metal market forms part of industrial intermediary products, one of the priority sectors monitored by the SACC, and thus false coordination of purchase prices may materially interfere with pricing in the downstream steel value chain. Commissioner Doris Tshepe further provided that dismantling any alleged price-fixing cartel in the scrap metal market would significantly assist in getting rid of artificial barriers to entry and foster a favourable environment for all firms, especially small firms and businesses owned by historically disadvantaged persons to contribute to the market.

The dawn raid comes as a surprise, particularly given that while dawn raids are certainly an effective investigative tool that may be utilised by the SACC as part of its enforcement efforts, the use of dawn raids has been significantly limited in recent years, with the last dawn raid conducted in 2022 on a number of insurance firms. The dawn raids, however, indicate the SACC’s continued commitment to enforcement in the metal sector.