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[2008] ZACT 92
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Competition Commission and Others v American Natural Soda Ash Corporation and Another (49/CR/Apr00) [2008] ZACT 92 (4 November 2008)
COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case No:
49
/CR/Apr00
In
the matter between:
The Competition
Commission Complainant
Botswana
Ash (Pty) Ltd 1
st
Intervening Complainant
Chemserve Technical
Products (Pty) Ltd 2
nd
Intervening Complainant
and
American Natural Soda Ash
Corporation 1
st
Respondent
CHC Global (Pty) Ltd
2
nd
Respondent
Panel
D
Lewis (Presiding Member), N Manoim (Tribunal
Member), and L Reyburn
(Tribunal Member)
Heard on
4
November 2008
Decided on
4
November 2008
Order
The Tribunal, hereby
confirms the settlement agreement and the addendum to the settlement
agreement, annexed hereto marked "A"
and "B"
respectively, as agreed to and proposed by the Competition Commission
and the Respondents.
D Lewis
Concurring: N Manoim and
L Reyburn
IN THE COMPETITION
TRIBUNAL OF SOUTH AFRICA
Held at Pretoria
CC
Case No: 1999OCT40 CT
Case
No: 49/CR/Apr00
In
the matter between:
The
Competition Commission Complainant
Botswana
Ash (Pty) Ltd First Intervening Complainant
Chemserve
Technical Products (Pty) Ltd Second lntervening Complainant
and
American
Natural Soda Ash Corporation First Respondent
CHC
Global (Pty) Ltd Second Respondent
SETTLEMENT
AGREEMENT BETWEEN THE COMPETITION COMMISSION, THE AMERICAN NATURAL
SODA ASH CORPORATION AND CHC GLOBAL (PROPRIETARY)
LIMITED IN REGARD
TO ALLEGED CONTRAVENTIONS OF SECTION 4(1
)(b)
OF
THE COMPETITION ACT, 1998 (ACT NO. 89 OF 1998), AS AMENDED
The
parties hereby agree that application be made to the Competition
Tribunal to confirm the settlement agreement described below.
1.
Definitions
For
the purposes of the settlement agreement the following definitions
shall apply-'
1.1. "Act"
means the Competition Act, 1998 (Act No. 89 of 1998), as amended;
1.2. "Agreement"
means this agreement duty signed and concluded between the
Commission, ANSAC and CHC;
1.3. "ANSAC
means the American Natural Soda Ash Corporation;
1.4. "Botash"
means Botswana Ash (Proprietary) Limited;
1.5. "CAC"
means the Competition Appeal Court;
1.6. "CHC"
means CHC Global (Proprietary) Limited;
1.7
"Chemserve"
means Chemserve Technical Products (Proprietary) Limited;
1.8.
"Commission''means the Competition
1.9. "Complaint"
means the complaint filed by Botash and Chemserve against ANSAC and
CHC on 28 October 1999 In terms
of section 49D of the Act, and
referred by the Commission to the Tribunal on 14 April 2000 in terms
of section 50 of the Act;
1.10. "Membership
Agreement" means the agreement, as amended, concluded between
certain United States producers and having
as Its purpose the
promotion by ANSAC of export sales and to improve the competitive
position of United States soda ash in foreign
markets by creating a
corporation for the sole and exclusive purpose of engaging in export
trade and making export sales strictly
in accordance with the policy
and provisions of the United States' Webb-Pomerene Act.
1.11. "Parties"
means the Commission, ANSAC and CHC;
1.12. "SCA"
means the Supreme Court of Appeal;1.13
"Tribunal"
means the Competition Tribunal of South Africa.
2.
Commission's investigation and findings
2.1
Following the submission of the complaint by Botash and Chemserve on
26 October 1999, to the effect thai ANSAC and CHC had
contravened
sections 4(1)(b)(i) and 4(1)(b) (if) of the Act, the Commission
undertook an investigation into these alleged prohibited
practices.
2.2.
The
Commission investigated the complaint and after such investigation
found that:
2.2.1. ANSAC
is an association incorporated in accordance with the provisions of
the United States Export Trade Act, 1918, commonly
known as the
Webb-Pomerene Act
2.2.2.
The purpose of the Webb-Pomerene Act Is to exclude the application
of the Sherman Act of 1890 to United States associations
engaged
solely in export trade and whose activities do not restrain trade
within the United States.
2.2.3.
FMC Wyoming Corporation, General Chemica
(Soda
Ash) Partners, Solvay Soda Ash Joint Venture, OCI Chemical
Corporation and IMC Chemicals Inc., as members of ANSAC, are obliged
in terms o
f
the
Membership Agreement to sell soda ash for export exclusively through
ANSAC to any country outside the United States other than
Canada.
2.2.4. In
terms of the membership agreement and its bylaws, ANSAC has a board
of directors to which each member is entitled to nominate
the
appointment of two directors,
2.2.5. The
board of directors is entitled to make certain decisions Including
the price at which soda ash is offered for export
sale to customers,
as well as trading conditions pertaining to such sales.
2.2.6. In
respect of its sates of soda ash to South Africa, ANSAC had engaged
CHC as its agent and in that capacity CHC gave effect
to the
decisions made by ANSAC.
2.3
Upon
concluding its investigation the Commission determined that
ANSAC,
together with CHC as its agent, had contravened section
4(1){b)(i} of the Act
In that ANSAC had determined prices and
trading conditions in South Africa
In respect of the sale In South
Africa of soda ash of its members.
Accordingly,
on 14 April 2000, the Commission referred the Complaint under Case No
49/CR/AP R00 to the Tribunal in terms of section
50 of the Act.
2.4.
Botash and Chemserve were later joined as interveners In these
proceedings.
3.
ANSAC's
defence
ANSAC
and CHC opposed the referral on the grounds,
inter
alia,
that
the challenged conduct constituted no contravention of the Act, and
was not an improper agreement, but rather constituted,
and was in
pursuit of a legitimate, open and transparent corporate joint
venture, validly created and existing under the laws of
the United
States for purposes of promoting export sales, and generating
significant logistic efficiencies and reliability shipment
and
Whose
impact
market
was pro-competitive.
4.
Proceedings
before the Tribunal, CAC and SCA
4.1. Between
February 2000 and July 2008, the parties have been involved in
extended litigation Involving points in limine and appeals
including
inter
alia
whether
the Tribunal has jurisdiction over ANSAC's economic activities in
South Africa and whether ANSAC had contravened section
4(1)(b)(l) of
the Act.
4.2. On
13 May 2005, the SCA directed that the matter be returned for further
proceedings before the Tribunal in order for the latter
to
characterise the conduct of ANSAC and GHC for purposes of the
application of section 4(1 )(b) of the Act.
4.3. On
23 July 2008, hearings into the merits of the matter commenced before
the Tribunal, during which evidence was led. On 28
August 2008, ANSAC
and CHC closed their case. Closing argument Is scheduled to take
place from 4 to 6 November 2008.
4.4. On
16 September 2008, ANSAC and CHC approached the Commission to discuss
settlement, stating that ANSAC had made a commercial
decision to
withdraw from the South African market, that in light thereof ANSAC
and CHC wished to enter Into an appropriate settlement
agreement
solely for purposes of settling the instant proceedings and avoiding
further unnecessary litigation and expense,
and
that
as
part
of such agreement ANSAC was willing to make
a
limited
admission to
a
contravention
of the Act.
5.
Admission
Solely
for purposes of this settlement agreement to settle the instant
proceedings, ANSAC admits that the Membership Agreement eliminates
price competition between its members in export sales to South Africa
in contravention of section 4(1)(b)(i) of the Act.
6.
Undertakings
by ANSAC
6.1.In
settlement proceedings; ANSAC
Undertakes
6.1.1. to
make no further export sales to South Africa for delivery more than 6
(six) months after the date of confirmation of this
agreement by the
Tribunal;
6.1.2. within
30 (thirty) business days of confirmation of this Agreement by the
Tribunal to:
6.1.2.1. make
all
modifications
and amendments necessary to the Membership Agreement, so as to ensure
that members of ANSAC, rather than exporting
exclusively through
ANSAC and/or its agents or intermediaries, shall be free in future to
negotiate and contract directly with
and make sales to South African
consumers should they so choose;
6.1.2.2.file
the amended agreement, duly signed by all the members, with the
Competition Tribunal and with the Commission;
6.1.2.3. notify
all
members
in writing that they are free to make export sales to South Africa on
an Independent basis;
6.1.3
to
not in any way whatsoever influence or require its members to
not
make export sales to South Africa.
6.2
ANSAC
will provide the Commission with documentary proof to the
satisfaction of the Commission that it has carried out its
undertakings
in terms of clause 8.1.2 above.
7.
Administrative
Penalty
7.1. Having
regard to the provisions of section 58(1)(a)(Eli) read with sections
59(1)(a), 59£2) and 59(3) of the Act, the
Respondents agree to
pay an administrative penalty in the sum of R9 696 846,96 (nine
million six hundred and ninety-six thousand,
eight hundred and
forty-six Rand and ninety-six cents) representing 8% of soda ash
annual turnover in South Africa.
7.2. The
penalty will be paid by the Respondents to the Commission within 30
(thirty) business days of the confirmation of the settlement
agreement by the Tribunal.
7.3. The
Commission will, pay the aforementioned amount .to the National
Revenue
8.
Full
and Final Settlement
This
Agreement is entered into in full and final settlement of all
proceedings between the parties in relation to any alleged
contravention
of the Act under Commission Case No. 19990CT49 and
Tribunal Case No. 49/CR/AprOO including all pending appeals arising
out of these
proceedings.
9.
Variation
No
contract varying, adding to, deleting from or canceling this
Agreement, and no waiver of any right under this Agreement, shall
be
effective unless reduced to writing and signed by or on behalf of the
Parties.
Dated
and Signed at
New
York
on this the
31
day of
October
2008
Signature
______________
Name
_______________________
Designation
____________________
Duly
authorized representative of American Natural Soda Ash Corporation
and CHC Global (Pty) Ltd
Dated
and Signed at Pretoria on 3 November 2008
________________
Shan
Ramuruth
Commissioner
Competition
Commission of South Africa
ADDENDUM TO SETTLEMENT
AGREEMENT IN CC CASE NO. 1999OCT40 AND CT CASE NO 49/CR/Apr00
The undertaking in
paragraph 6.1.1 includes within its scope that ANSAC will not sell
soda ash to any natural or juristic person,
or through any entity,
vehicle or trust ("person"), or otherwise transact with
any person, in circumstances where ANSAC
knows, or there are
reasonable grounds for suspecting, that such person intends to sell,
whether directly or indirectly, ANSAC
soda ash into South Africa.
ANSAC undertakes that
any utilisation made by an ANSAC member of ANSAC's logistical
arrangements or capacity, including, but not
limited to, any and all
arrangements with providers of any logistical services, including,
but not limited to, railway, shipping,
handling, transporting,
warehousing, storage, stevedoring, delivery and scheduling services,
for export sales to South Africa
shall not be used so as to engage
in conduct prohibited by
section 4
of the
Competition Act 89 of
1998
.
Ansae and CHC will be
jointly and severally liable for the agreed, alternatively taxed,
costs of three legal representatives (attorney
and two counsel),
together with such qualifying fees of experts employed by Botash for
purposes of this litigation as are agreed,
alternatively allowed on
taxation.