The Federal Anti-Monopoly Service will ask Mechel to slash 30 percent from the prices it charges domestic steelmakers for its coal, a newspaper reported on Wednesday, in a move analysts say could cost the company $540 million.

Mechel, the country's largest coking coal miner, is one of three companies under investigation for pricing. Its New York-traded stock lost half its value in three trading days last month after Prime Minister Vladimir Putin twice attacked its sales practice.

Vedomosti reported Wednesday that the anti-monopoly service would ask Mechel to cut its domestic prices in return for limiting a fine to 7 percent to 8 percent of annual coking coal revenues, rather than the maximum 15 percent.

The anti-monopoly service was meeting Wednesday evening to discuss possible action against Mechel, a spokeswoman for the service said on condition of anonymity.

Mechel's billionaire owner Igor Zyuzin is among a group of steel barons who will meet with Deputy Prime Minister Igor Sechin on Thursday, Vedomosti reported, citing two metals sources.

A Mechel spokesman said the company had not been informed of any decision and had no further comment on the matter.

The service is investigating Mechel and its nearest competitor in coking coal, Raspadskaya, as well as a trading arm of steelmaker Evraz Group over coking coal prices in the domestic market.

The case has drawn special attention after Putin's attacks on Mechel, which erased $8 billion from the company's market value and prompted some observers to draw parallels with Yukos, the once-mighty oil firm destroyed by massive back tax claims.

UniCredit Aton analysts said a fine and a price cut would ease investors' fears of a political attack on Mechel and its billionaire main owner, Igor Zyuzin.

"Should the fines and price decrease be the only outcomes for Mechel, the company would suffer less than expected, implying that the attack by Prime Minister Vladimir Putin was not politically motivated," Unicredit Aton said in a note.

But analysts said an enforced price reduction, should the anti-monopoly service propose it, could have damaging consequences for the sector.

"It would be very bad sentiment-wise, as it would mean an effective price cap on coking coal prices and pose the question of what happens next. Will the government do the same for steel prices?" Deutsche Bank mining analyst Olga Okuneva said.

UralSib said a 7 percent to 8 percent fine for Mechel would translate to between $60 million and $70 million, based on 2007 coking coal sales of about $870 million.

A further $535 million in revenue in the first quarter could add $37 million to 43 million to any fine, the analysts said.

"Of greater importance is the threat to lower domestic coking coal prices by 30 percent, which would have far more serious consequences for Mechel and the coking coal sector," UralSib analysts said.

They said such a cut could cost Mechel $540 million in lost revenues, while Raspadskaya and Evraz might also lower prices.

Raspadskaya said in a statement that it had cooperated fully with the anti-monopoly investigation and its chief executive, Gennady Kozovoi, had met with anti-monopoly service head Igor Artemyev on Aug. 11.