French competition authorities fined 11 steel trading companies, including three subsidiaries of ArcelorMittal, a record €575 million (£518 million) yesterday for running a cartel that carved up the sector between its members over long lunches.

In a 151-page report, France's Competition Council said that the cartel had cost the French economy “hundreds of millions of euros” between 1999 and 2004.

Imposing a virtual monopoly on the industry, the 11 companies had set prices, divided up contracts between them, blocked exterior rivals and punished “deviant” merchants who failed to obey their orders, the report said.

PUM Service Acier, a division of ArcelorMittal, the steel group formed by the takeover of Arcelor in Europe by Mittal of India in 2006, was ordered to pay €288million after being branded one of the three cartel leaders.

This was the biggest single fine ever levied by Le Conseil de la Concurrence. The overall fine was also the biggest since the Competition Council was created in 1986, beating the €534 million it imposed on mobile telephone operators in 2005.

The Council said that two other companies helped to orchestrate the cartel: KDI, a subsidiary of Germany's Klöckner, which was fined €169 million; and France's Descours & Cabaud, which was fined €82.5 million.

Eight other companies, including ArcelorProfil and AMD Sud Ouest, both subsidiaries of ArcelorMittal, were given fines ranging from €100,000 to €13 million.

The French Federation of Metal Distributors was also denounced for its role in the scandal and fined €124,500.

The companies have one month in which to decide whether to lodge an appeal. ArcelorMittal said that it expected to do so, but declined to comment further.

The fines come after the Competition Council began an inquiry in 2005 following complaints by steel trading companies' customers that there was scarcely any variation in prices for products such as bars and beams.

Investigators discovered extensive contacts between heads of supposedly rival businesses, often at lunches where they set price ranges for up to 90percent of the steel products sold in France.

They also divided up customers between them and colluded to prevent competitors from outside the cartel gaining a foothold in the market, according to the Competition Council.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive