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[2010] ZACT 24
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Competition Commission v Marley Pipes Systems (Pty) Ltd, Competition Commission v DPI Plastics (Pty) Ltd and Others (15/CR/Feb09) [2010] ZACT 24; [2010] 1 CPLR 81 (CT) (31 March 2010)
COMPETITION TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No: 15/CR/Feb09
In the matter between:
The
Competition Commission
Applicant
and
Marley Pipes System (Pty)
Ltd
Respondent
Panel
N
Manoim (Presiding Member), Y Carrim (Tribunal
Member), and A
Wessels(Tribunal Member)
Heard on : 31
March 2010
Decided on : 31
March 2010
Order
The
Tribunal hereby confirms the order as agreed to and proposed by the
Competition Commission and the respondent, annexed hereto
marked "A".
N
Manoim
Concurring:
Y
Carrim and A Wessels
IN
THE COMPETITION TRIBUNAL OF SOUTH AFRICA
(HELD IN PRETORIA)
CCCASENO:
2008MAR3596
CT
CASE NO.: 15/CR/FEB09
In
the matter between;
THE
COMPETITION COMMISSION
Applicant
i
and
MARLEY
PIPE SYSTEMS (PTY) LTD
Respondent
In
re:
THE
COMPETITION COMMISSION
Applicant
DPI
PLASTICS (PTY) LTD
First
Respondent
PET&ETAKIS
AFRICA (PTY) LTD
Second
Respondent
MARJLEY
PIPE SYSTEM (PTY) LTD
Third
Respondent
SWAJV
PLASTICS (PTY) LTD
Fourth
Respondent
AMITECH
SOUTH AFRICA (PTY) LTD
Fifth
Respondent
FLO-TEK
PIPES & IRRIGATION (PTY) LTD
Sixth
Respondent
MACIVEIL
AGENCIES (PTY) LTD
Seventh
Respondent
ANDRG
(PTY) LTD
Eighth
Respondent
GAZELLE
PLASTICS (PTY) LTD
Ninth
Respondent
SETTLEMENT
AGREEMENT BETWEEN THE COMPETITION COMMISSION AND MARLEY PIPE SYSTEMS
(PTY) LTD IN REGARD TO CONTRAVENTIONS OF SECTION
4 (1) (b) OF THE
COMPETITION ACT 89 0F1998
The
Competition Commission and Marley Pipe Systems (Pty) Ltd hereby agree
that ah application be made to the Competition Tribunal
for
confirmation of this
Settlement
Agreement
as an order of the Tribunal in terms of sections 58
(1
)(a)(iii)
and 59
(1)
(a)
of the
Competition Act 89 of 1998
, on the terms set out below:
Definitions
For
the purposes of this settlement agreement the following )
definitions shall apply:
1.1.
“
Act"
means
the Competition Act,1998 (Act No.89 of 1998) as amended,
1.
2
"Amitech"
means
Amitech South Africa (Pty) Ltd, a public company registered and
incorporated in accordance with the laws of the Republic
of South
Africa, with its registered office, alternatively pHncipal place of
business at 33 Potgieter Street, Alrode;
I
i i
1.3
"Andrag"
deans Andrag
(Pty)
Ltd, a public company registered and incorporated in accordance with
the laws of the Republic of
South
Africa, with its registered office, alternatively principal place of
business at La Belle Road, Bellville;
1.4.
"CLP"
means
the Corporate Leniency Policy prepared and issued by the Commission
as a guideline to clarify the Commission's policy approach
on matters
falling within its jurisdiction in terms of the Act;
1.5.
"Commission"
means
the Competition Commission of South Africa, a statutory body
established in terms of
section 19
of the Act, with its principal
place of business at Building C, Mulayo Building, DTI Campus, 77
Meintjies Street, Sunnyside, Pretoria,
South Africa;
1.6.
"Commissioner"
means
the Commissioner of the Competition Commission appointed in terms of
section of 22 of the Act;
1.7.
"Pipes
Complaint
Referral"
means
the Complaint Referral referred to the Tribunal by the Commission
under case number 15/CR/Feb09;
1.8.
"DPI"
means
DPI Plastics (Pty) Ltd, a public company registered and incorporated
in accordance with the laws of the Republic of South
Africa, with its
registered office, alternatively principal place of business at 1
Setchell Road, Roodekop, Germiston;
1.9.
"FLO
-TEK"
means FLOTEK Pipes and Irrigation (Pty) Ltd, a public company
registered and incorporated in accordance with laws of
the Republic
of South Africa, with its registered office, alternatively principal
place of business at 320 Ida street, Menlo Park,
Gauteng;
1.10.
"Gazelle"
means
Gazelle Plastics (Pty) Ltd, a public company registered and
incorporated in accordance with the laws of the Republic of South
Africa, with its registered office, alternatively principal place of
business at Panorama Office Estate Unit 3, Kudu Street Allehsnek,
Gauteng
1.11.
"HDPE"
means
High Density Polyethylene, which is the pipe product that is harder
and more opaque and can withstand somewhat higher temperature.
1.12.
"Macneil
Agencies?'
means Macneil Moulding Agencies (Pty) Ltd, a public company
registered and incorporated in accordance with laws of the
Republic
of South Africa, with Its registered office alternatively principal
place of business at Noland House, River Park, Cape
Town.
1.13.
"Marley" means Marley Pipe Systems (Pty) Ltd, a public
company registered in accordance With laws of the Republic
of South
Africa, with its registered office, alternatively principal place of
business at 1 Brickley Road, Pretoriousstad, Nigel;
1.14.
"Petzetakis"
means
fetzetakis Africa (Pty) Ltd, a public company registered in
accordance with laws of the Republic of South Africa, with its
registered office, alternatively principal place of business at 1
Piet Pretorius Street, Rosslyn
1.15.
"PVC"
means
Polyvinylchloride, is a thermoplastic polymer pipes products which is
used in construction.
1.16.
"Specialty
Products"
means
Marley's speciality products that are more sophisticated than
ordinary PVC and HDPE pipes (such as Roof Syphonics Systems),
and
require targeted marketing and sales activities to engineers*
architects and consultants.
1.17.
"Swan
Plastics"
means
Swan Plastics CC, a close corporation registered and incorporated In
accordance with laws of the Republic of South Africa,
with its
registered office, alternatively principal place of business at 49
Jeffels Road, Prospecton, Durban;
1.18.
"Settlement
Agreement"
means
this settlement agreement duly signed and concluded between the
Commission and Marley.
1.19.
"Tribunal"
means
the Competition Tribunal of South Africa, a statutory body
established in terms of
section 26
of the Act, with its principal
place of business at Building C
;
Mulayo Building. DTI Campus, 77 Meintjies Street, Sunnyside,
Pretoria.
2. Complaint
investigation and Commission's findings
2.1
The Commission has informed Marley that:
2.1.1.
On 12 October 2(307, the first respondent filed an intermediate
merger notification with the Commission. It intended to merge
with
Incledon Cape (Pty) Ltd.
2.1.2.
During the course of the merger investigation the Commission found
inter
alia
that
the merging parties were involved in collusive activities in
contraventiqn of the Act. The merger was subsequently prohibited.
2.1.3
Prior to the prohibition of the merger, the first respondent applied
for immunity from prosecution and fines in terms of the
Commission's
Coqiorate Leniency Policy. In its application submitted on 08 January
2008, the first respondent furnished the Commission
with evidence of
the existence of collusion in the markets for pipe products involving
it and the other respondents. The alleged
collusibn involved:
2.1.3.1.
Price fixing;
2.1.3.2.
Bid rigging; and
2.1.3.3.
Allocation of markets and/ or customers.
2.2.
The Commission initiated and conducted an investigation as a result
of which it found that all respondents had contravened
section 4
(1)
(b) of the Act as follows:
2.2.1
The
respondents agreed to; fix the discounts that each would give
to
customers in contravention of
section 4(1)
(b) (i) of the Act,
2.2.2
The
respondents agreed to submit uniform prices in response to tenders
and allocate tenders to one another on rotational basis
in
contravention of
sections 4
(l)(b)(ii) and (iii) of the Act.
2.2.3
On 02 February 2009 the Commission referred its findings to the
Tribunal under CT case number 15/CR/Feb09.
3.
Settlement
discussions
3
.1.
Marley
co-operated with the Commission
's
investigation
and provided j information to the Commission, including detailed
statements from its ! employees.
3.2
Marley admitted that it had contravened the Act in that during the
period between 2004 to 2007, Marley and the other respondents,
in
respect of PVC land HDPE pipes products:
3
.
2.1.
attended
a series of meetings wherein agreements, arrangements and
understandings
to fix selling prices ' and/or price discounts in respect of the PVC
and the HDPE pipes products were reached, in
contravention of
section
4
(1) (b) (i) of the Act;
3.2.2.
attended a series of meetings wherein agreements, arrangements and/or
understandings to divide markets for pipes products
in the respective
areas (Eastern Cape, Kwazulu-Natal, Gauteng and Western Cape) were
reached, in contravention of
section 4(l)(b)(ii)
of the Act; and
3.2.3.
agreed to allocate/share contracts amongst themselves in accordance
with agreed upon percentage shares of the markets for
PVC and HDPE
pipes products arid fixing the prices at which quotations were
offered to contractors in order to secure such contracts,
in
contravention of
section 4(1)
(b) (iii) of the Act.
3.3.
The conduct referred to above occurred in
inter
alia:
Eastern
Cape;
Kwazulu-Natal;
Gauteng;
and
3
.
3.
4
Western Cape.
3.4
Marley and the Commission then engaged in protracted settlement
d
iscussions
pertaining
to the determination of an appropriate penalty, the Outcome of which
is this Settlement Agreement.
t
4
Admissions
t
1
>
4.1
Marley admits that it has contravened
section 4
(l)(b)
(i),(ii)
and
(iii) of the Act as detailed in paragraph 3 above.
!
5
Agreement
concerning future conduct
5.1
Marley agrees to fully cooperate with the Commission in relation
to the prosecution of any other respondents in this Complaint
referral, | Without limiting the generality of the above,
Marley specifically agrees to:
5.1.1
testify in support of
the
Commission's
case regarding
the
contraventions in this settlement agreement; and
5.1.2
provide evidence, written or otherwise, which is in its possession or
under its control concerning the contraventions Contained
in this
settlement agreement.
5.2
.
Marley
agrees to develop and implement a compliance programme incorporating
corporate governance, designed to ensure
that employees,
management and directors within Marley, its subsidiaries
and
business units do not engage in any contraventions of section
4(1)
(b)
of the Act, a copy of which programme shall be submitted to the
admission within 60 days of the date of confirmation of this
settlement
agreement as an order by the Tribunal.
5.3Marley
agrees that it will cease to engage in conduct detailed in paragraph
3.
6
Administrative
Penalty
6.1
.
Having
regard to the provisions of
section 58(1)
(a) (iii), read with
sections
59(1)
(a),
59
(2) and (3) of the Act, Marley accepts that it is liable
to pay an administrative penalty.
6.2
The
parties have agreed that Marley will pay an administrative penalty in
the sum of R31 078,213.02 (thirty one million one hundred
and
seventy-eight thousand two hundred and thirteen rands and two cents)
being
6% of Marley's total turnover in the 2007 financial year, less the
turnover
attributable to Specialty Products.
6.3.
Marley
will pay the penalty amount to the Commission in two equal annual
payments, the first such payment to be made within 30 days
of
confirmation of this Settlement Agreement by the Tribunal and the
remaining payment on or before 28 February 2011.
The
Commission will pay these sums to the National Revenue Fund in
terms of
section 59
(4) of the Act.
7
Full
and
final resolution
This
settlement agreement is entered Into in full and final settlement and
upon confirmation as an order by the Tribunal, concludes
all
proceedings between the Commission and Marley relating tp any alleged
contraventions by Marley of
section 4
(1) (b) of the Act that are the
subject of the Commission's investigation under case number
2008Mar3596 and its complaint referral
under CT case number
15/CR/Feb09.
Dated
at
Nigel
on this the
9
day of
March
2010
Louis
Albertyn
Managing
Director: Marley Pipe Systems (Pty) Ltd
Dated
at
Pretoria
on this the
16
day
of
March
2010
Shan
Ramburuth
The
Commissioner,
Competition
Commissioner