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[2010] ZACT 26
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Competition Commission v Concrete Units (Pty) Ltd and Others (23/CR/Feb09) [2010] ZACT 26; [2010] 1 CPLR 74 (CT) (31 March 2010)
COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No: 23/CR/Feb09
in
the matter between:
The
Competition Commission
Applicant
and
Concrete
Units (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
AT PRETORIA
In
the matter between:
Ref:
2008Mar3595
THE
COMPETITION COMMISSION
Applicant
And
CONCRETE
UNITS (PROPRIETARY) LIMITED AND OTHERS
Respondent
SETTLEMENT
AGREEMENT BETWEEN THE COMPETITION COMMISSION AND CONCRETE UNITS
(PROPRIETARY) LIMITED IN REGARD TO THE ALLEGED CONTRAVENTION
OF
SECTIONS 4 (1) (b) (I), 4 (1) (b) (ii),(1) (b) (iii) OF THE
COMPETITION ACT NO. 89 OF 1998 (AS AMENDED)
The
Commission
and
Concrete
Units
hereby
enter into a
Settlement
Agreement
in
terms of section 49D of the Competition Apt, No. 89 of 1998, (as
amended) (the "Act") and agree that application be
made for
an order confirming the
Settlement
Agreement,
in
terms of section 58(1 )(b) of the Act, on the terms set out more
fully below.
Definitions
For
the purposes of this Consent Order the foiiowing definitions shall
apply:
1.1.
"Act"
means
the
Competition Act, Number
89 of 1998 (as amended).
1.2.
"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, Gauteng.
1.3.
"Commissioner"
means
the Commissioner of the Competition Commission, appointed in terms of
section £2 of the Act.
1.4.
"Complaint"
means
the Complaint initiated by the
Commissioner
of
the
Commission
against
the
Respondents
under
case number 2008MAR3595.
1.5.
"Concrete
Units"
means
Concrete Units (Proprietary) Limited, a private company duly
registered in accordance with the company laws
of
the
Republic
of
South
Africa, wjth its principal
place
of
business at Montreal Drive, Airport industria, Cape
Town.
1.6.
"Days”
means
calendar days.
1.7.
"Parties"
means,
collectively, the Commission and
Concrete
Units.
1.8.
"Period"
means
the period from the year 2000 to September 2007.
1.9.
"Prohibited Practice"
means
a practice prohibited in terms of Chapter 2 of the Act.
1.10.
"Respondents"
means,
collectively, Aveng Africa Limited f/a Infraset ("Infraset"),
Cape Concrete (Proprietary) Limited
("Cape
Concrete"),
Cobro
(Proprietary) Limited
("Cobro"),
Concrite
Waiis (Proprietary) Libiited, Concrete Units, Craig Concrete
(Proprietary) Limited
("Craig
Concrete"),
DND
Concrete (Proprietary) Limited, Empowa-Grinaker Lta (Proprietary)
Limited, Grallio (Proprietary) Limited, Southern Pipeline
Contractors
(Proprietary) Limited
("SPC")
and
Rocla (Proprietary) Limited
("Rocla").
1.11.
"Settlement Agreement"
means
this agreement duly signed and concluded between the
Commission
and
Concrete
Units.
1.12.
"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, Gauteng.
The
Complaint and Complaint investigation
2.1.
During
December 2007, the
Commission
received
information regarding
allegations that the
Respondents
operated
a cartel in the pre-cast concrete
industry
in.
South Africa. The information was received by virtue of a
corporate
leniency application submitted to the
Commission
by
one of the
Respondents,
Rocla.
In
its leniency application,
Rocla
advised
the
Commission
that
the
Respondents
had
engaged in the following conduct -
2.1.1.
fixing the selling price of precast concrete pipes, culverts and
manholes;
2.2.2.
dividing the markets for the production and distribution of precast
concrete pipes, culverts and manholes; and
2.1.3.
collusive
tendering in respect of the supply of precast concrete products and
precast concrete sleepers to certain suppliers.
2.2
.
The
Commissioner
initiated
an investigation into the activities of the
Respondents
on
19 March 2008. These investigations established that the
Respondents
operated
a cartel within the pre-cast concrete industry in South Africa and,
in certain instances, in neighbouring African countries
such as
Namibia, Botswana,
Mozambique,
Lesotho and Swaziland.
Commission's
Findings
Upon
completion of its investigation into the
Complaint,
the
Commission
found
that
Concrete
Units
had
engaged in the following
prohibited
practices
during
the
Period,
namely
-
3.1.
Price fixing and fixing of trading conditions
3.1.1.
As regards the production and supply of precast concrete pipes in the
Gauteng region of South Africa,
Concrete
Units
and
the relevant
Respondents
(namely,
Craig
Concrete, Infraset, Rocla
and
SPC)
engaged
in price fixing and fixing of trading conditions for the manufacture
and sale of pre-cast concrete pipes, in contravention
of section
4(1)(b)(i) of the
Act.
3.1.2.
As regards the production and supply of precast concrete culverts in
the
Gauteng
region
of South Africa,
Concrete
Units
and
the relevant
Respondents
(narne'iy,
infraset.
and
Rocia)
engaged
in price fixing and fixing of trading conditions for the manufacture
and sale of pre-cast concrete culverts, in contravention
of section
4(1 )(b)(i) of the
Act.
3.1.3.
As
regards the production and supply of precast concrete culverts in
the
Wes
tern
Cape' region
of South Africa,
Concrete
Units
and
the
relevant
Respondents
(namely,
infraset
and
Roo(a)
engaged
in price
fixing and fixing of trading conditions for the
manufacture and sale of
pre-cast
concrete culverts, in contravention of section 4(1)(b)(i) of the
Act.
3.1.4.
More
particularly, the prjce fixing and fixing of trading terms
and
conditions involved
Concrete
Units
and
the relevant
Respondents
in
each
case, fixing -
3.1.4.1.
the prices that each would quote to customers/contractors allocated
to each pther for the pre-cast concrete pipes and culverts;
3.1.4.2.
the price increases and discounts to be offered to customers for the
pre~cast concrete pipes and culverts; and
3.1.5.
Furthermore, discussions on price increases, prices to be quoted to
customers and discpunts occurred between
Concrete
Units
and
the relevant
Respondents
during
meetings held during the
Period.
These
discussions were confirmed in written documentation such as price
lists and
modus
operandi
documentation
generated and exchanged between
Concrete
Units
and
the relevant
Respondents
during
the
Period.
3.1.6.
Through these agreements,
Concrete
Units and
the
Respondents
prevented
and/or limited price competition amongst themselves in relation to
the pricing of precast concrete pipes and culverts.
32.
Market
Division
3.2.1.
As regards thp production and supply of precast concrete pipes in the
Gauteng
region
of South Africa,
Concrete
Units
and
the relevant
Respondents
(in
particular,
Craig
Concrete, infraset, Rocla
and
SRC)
agreed
to divide/share the market for precast concrete pipes in
contravention of section 4{1)(b)(ii) of the
Act.
3.2.2.
As regards the production' and supply of precast concrete culverts in
the Gauteng region of South Africa,
Concrete
Units
and
the relevant
Respondents
(in
particular,
Infraset
and Rocla)
agreed
to divide/share the market for precast concrete pipes in
contravention of section 4(1)(b)(ii) of the Act.
3.2.3.
More particularly, the dividing/sharing of the market for precast
Concrete
Pipes
and
culverts involved Concrete Units and the relevant
Respondents
in
each case, -
3.2.3.1.
allocating customers/contracts amongst themselves in accordance with
their agreed respective percentage market shares of
the Gauteng
market for precast concrete pipes and culverts; and
3.2.3.2.
allocating specific territories within Gauteng to which each firm
would supply precast concrete pipes and culverts.
3.2.3.3.
Furthermore, in the market for precast concrete pipes in Gauteng it
was agreed that the following market shares would
be
maintained;
Craig
Concrete
(15.75%),
Concrete
Units
(10%),
infraset
(35.75%),
Rocla (26.75%) and SPC (11.75%).
3.2.3.4.
These figures were amended subsequent to SPC's acquisition of
Craig
Concrete
in
or around 2001, save for
Concrete
Units,
whose
market share remained at 10%.
3.2.4.
As
regards the production and supply of precast concrete culverts in
the
Western
Cape region
of South Africa,
Concrete
Units
and
the
Respondents
(in
particular,
Infraset
and
Rocla)
agreed
to divide/share the market for precast concrete culverts in
contravention of section 4(1)(b)(ii) of the
Act
by-
3.2.4.1.
allocating customers/contracts amongst themselves in accordance with
their respective percentage market shares of the Western
Cape market
for precast concrete culverts; and
3.2.4.2.
allocating specific territories within the Western Cape to which each
firm would supply precast concrete culverts.
3.2.5.
Furthermore,
Concrete
Units
and
those
Respondents
(namely,
Cape
Concrete,
infraset
and
Rocla)
who
were its competitors for the
manufacture and sale of precast
concrete culverts in the Western
Cape
region, agreed that
Cape
Concrete
would
not compete with
Concrete
Units, Infraset
and
Rocla
in
relation to precast concrete culverts in that region, in
contravention of section 4(1) (b)(ii) of the
Act,
3.2.6.
Furthermore,
Concrete
Units
and
the relevant
Respondents
(namely,
Infraset
and
Rocla)
agreed
that
Concrete
Units'
would
not manufacture any precast concrete pipes in the Western Cape region
unless the market reached a predetermined threshold
volume, in
contravention of section 4(1)(b)(H) of the
Act.
3.2.7.
The precast concrete pipes market in the Western Cape did not reach
the predetermined threshold during the
Period
and
consequently,
Concrete
Upits
never
entered this market.
3.3.
Collusive Tendering
Concrete
Units
engaged
in collusive tendering in relation to pre-cast concrete pipes and
culverts within the Gauteng region and culverts, within
the Western
Cape region, together with the relevant
Respondents
in
each case, in contravention of section 4{1)(b)(iii) of the
Act
4.
Admission
The
Commission
and Concrete Units
agree
that, for the duration of the
Period,
the
conduct engaged in by
Concrete
Units
(as
espoused in paragraph 3 above) constitutes a contravention, of
sections 4(1)(b)(i), 4(1)(b)(ii) and 4(1)(b)(iii) of the
Act.
5
Agreement
Concerning Future Conduct
5.1.
The
Parties
record
that
Concrete
Units'
participation
in the conduct that formed the subject matter of the
Complaint
ceased
in or about September 2007.
5.2.
Concrete
Units
undertakes
to refrain from engaging in price fixing, fixing of trading
conditions, market division and collusive tendering in contravention
of sections 4(1)(b)(i), 4(1)(b)(ii) and 4(1)(b)(iii) of the Act, in
relation to the manufacture and sale of fire-cast concrete
pipes and
culverts in South Africa.
5.3.
Within 6 months from the date of this
Settlement
Agreement, Concrete Units
agrees
to develop, implement, monitor and enforce a competition law
compliance programme in order to ensure that its employees,
management, directors and agents do not engage in future
contraventions of the
Competition Act.
5.4.
Concrete
Units
agrees
to make all reasonable efforts to co-operate with the
Commission
in
the prosecution of any other party in refation to the
Complaint.
This
includes, but is not limited tp providing relevant witness
statements, giving oral testimony before the
tribunal.
5.5.
Concrete Units
agrees
to provide copies of this
Settlement
Agreement
to
each of its present directors and during the five-year period
following the confirmation of this
Settlement
Agreement
by
the
Tribunal,
provide
a copy to any future director on his or her future appointment and in
each case draw the attention of such director to the
contents of the
Settlement
agreement.
6
Administrative
Penalty
In
terms of
section 58(1)(a)(Hi)
read with
sections 59(1
)(a), 59(2)
and 59(3) of the Act,
Concrete
Units
is
liable for an administrative penalty.
The
Parties
agree
that
Concrete
Units
will
pay an administrative penalty in the amount of R5 763 743 (five
million spven hundred and sixty three thousand, seven hundred
and
forty three rand), being 7 per cent of
Concrete
Units'
turnover
for the financial year ending 2008.
Concrete
Units
will
pay the administrative penalty Within 6 months of the date of the
confirmation of this
Settlement
Agreement
by
the
Tribunal.
The
Commission
will
pay the administrative penalty received from
Concrete
Units
into
the National Revenue Fund as contemplated by section 59(4) of the
Act.
7.
Application
to the Tribunal
The
Parties
to
this
Settlement
Agreement
hereby
agree that application be made to the
Tribunal
to
have
this
Settlement
Agreement
confirmed
as Consent Order as provided for in section 49D read with section
58(1 )(b) of the
Act.
8.
Full
and Final Settlement
This
Settlement
Agreement
is
entered into in full and final settlement and upon confirmation as a
Consent Order by the
Tribunal,
concludes
all proceedings between the
Commission
and
Concrete
Unjts
relating
to any alleged contravention by
Concrete
Units
of
sections 4(1)(b) (i), 4(1)(b)(ii) and 4 (1)(b)(iii) of the Act that
are the subject of the
Complaint
and
the
Commission's
Investigations
under case number 2008MAR3595.
Dated
and signed in
Cape
Town
on this the
1
st
day of
March
2010
Managing
Director:
Concrete
Units (Proprietary) Limited
Date
and signed in Pretoria on this the 1
st
day of Feb 2010
Shan
Ramburuth
The
Commissioner
Competition
Commission