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[2010] ZACT 41
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Competition Commission v Masana Petroleum Solutions (Pty) Ltd (06/CR/Mar10) [2010] ZACT 41; [2010] 1 CPLR 87 (CT) (23 June 2010)
COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No: 06/CR/Mar10
In
the matter between:
The
Competition Commission
Applicant
and
Masana Petroleum
Solutions (Pty) Ltd
Respondent
Pane!
N
Manoim (Presiding Member), Y Carrim (Tribunal
Member), and A Wessels
(Tribunal Member)
Heard on
23
June 2010
Decided on : 23
June 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
Y Carrim and A Wessels
concurring
IN THE COMPETITION
TRIBUNAL OF SOUTH AFRICA
HELD AT PRETORIA
CT Case No; 06/CR/
MAR10
CC Case
No: 2009Jan4223
In the matter
between:
COMPETITION COMMISSION
APPLICANT
And
CHEVRON SA (PTY) LTD
FIRST RESPONDENT
ENGEN LIMITED
SECOND RESPONDENT
SHELL SA (PTY) LTD
THIRD RESPONDENT
TOTAL
SA (PTY) LTD FOURTH RESPONDENT
MASANA PETROLEUM
SOLUTION (PTY LTD FIFTH RESPONDENT
SOUTHERN AFRICAN
BITUMEN ASSOCIATION SIXTH RESPONDENT
SASOL LIMITED
SEVENTH RESPONDENT
TOSAS (PTY)
LTD EIGHTH RESPONDENT
NOTICE
OF MOTION
PLEASE TAKE NOTICE
THAT the applicant refers a complaint to the Competition Tribunal for
an order in the following terms:
1. An order declaring
that the First to Sixth Respondents have contravened section
4(1)(b)(i) of the Act
2. An order directing
the First to Sixth Respondents to desist from such conduct;
3. An order directing
First, Second, Third, Fourth, Fifth and Sixth Respondents to pay an
administrative penalty equivalent to 10%
of each of the Respondents'
annual turnover in the Republic and its exports from the Republic
during the preceding financial year.
4.
Such further and /or alternative relief as the Tribunal may consider
appropriate.
Dated at Pretoria on
this 4
th
day of March 2010
COMPETITION COMMISSION
Applicant
Block
C, dti Campus
77
Meintjies Street
Sunnyside
Pretoria
Ref:
M Dorasamy /W Mkwananzi
m
ervind@compcom.co.za
wendym@compcom.co.za
IN
THE COMPETITION TRIBUNAL OF SOUTH AFRICA
HELD
IN PRETORIA
CTCase
No. 06/CR7Mar10
CC
Case No, 2009Jan4223
In
the matter between:
THE
COMPETITION COMMISSION Applicant
And
MASANA
PETROLEUM SOLUTIONS (PTY) LTD Respondent
In
re:
COMPETITION
COMMISSION Applicant
and
CHEVRON
SA (Pty) LTD First Respondent
ENGEN
LIMITED Second Respondent
SHELL
SA (PTY) LTD Third Respondent
TOTAL
SA (PTY) LTD Fourth Respondent
MASANA
PETROLEUM SOLUTIONS (Pty) LTD Fifth Respondent
SOUTHERN
AFRICAN BITUMEN ASSOCIATION Sixth Respondent
SASOL
LIMITED Seventh Respondent
TOSAS
(PTY) LTD Eighth Respondent
SETTLEMENT
AGREEMENT
BETWEEN
THE COMPETITION COMMISSION AND MASANA PETROLEUM SOLUTIONS
(PROPRIETARY) LIMITED IN REGARD TO ALLEGED CONTRAVENTION OF SECTION
4(1)(b)(i) OF THE COMPETITION ACT, 1998 (ACT NO. 89 OF 1998), AS
AMENDED
The
Commission
and
Masana
hereby
agree that application be made to the Competition Tribunal for the
confirmation of a Settlement Agreement in terms of section
58
(1)(a)(iii) of the Competition Act, 1998 (Act No. 89 of 1998), as
amended, on the terms set out below.
1.
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.
"Bitumen"
means
a residual fraction of crude oil, a mixture of organic components
that are highly viscous, black
and
sticky.
1.3.
"Chevron"
means
CHEVRON SA (PTY) LTD a company duly incorporated with limited
liability in terms of the company laws of the Republic of South
Africa, with its principal place of business at 19 DF Malan Street
Cape Town
1.4.
'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 1
st
Floor, Mulayo Building (Block C), the dti Campus, 77 Meintjies
Street. Sunnyside, Pretoria, Gauteng;
1.5.
"Commissioner"
means
the Commissioner of the Competition Commission, appointed in terms of
section 22 of the Act;
1.6
.
Complaint'
means
the complaint initiated by the Commissioner of the Competition
Commission in terms of section 49B of the Act under case number
2009Jan4223
1.7.
"Settlement Agreement
means
this agreement duly signed and concluded between the Commission and
Masana;
1.8.
"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;
1.9.
"Engen"
means
ENGEN LIMITED ("Engen"), a company duty incorporated and
registered in terms of the company laws of the Republic
of South
Africa with its principal place of business at Engen Court, Thibault
Square, corner of Riebeeck and Long Streets, Cape
Town.
1.10.
"Masana"
means
Masana Petroleum Solutions (Pty) Limited, a company duly incorporated
and registered in terms of the company laws of the Republic
of South
Africa with its principal place of business at 10 Junction Avenue,
Parktown, Johannesburg.
1.11.
"Parties"
means
the Commission and Masana;
1.12.
"SABfTA"
means
SOUTHERN AFRICAN BITUMEN ASSOCIATION ("SABITA") a voluntary
non profit association with its principal place of business
at 5
Lonsdale, Lonsdale Way, Pinelands, Cape Town.
1.13.
"Sasof"
means
SASOL LIMITED {"Sasol"), a company duly incorporated and
registered in terms of the company laws of the Republic
of South
Africa, with its principal place of business at 1 Sturdee Avenue,
Rosebank, Johannesburg
1.14.
"Shell"
means
SHELL SA (PTY) LTD ("Shell") a company duly incorporated
and registered in terms of the company laws of the Republic
of South
Africa, with its principal place of business at Shell House, 9
Riebeeck Street cape Town.
1.15.
"Tosas"
means
TOSAS (PTY) LTD (Tosas"), a company duly incorporated and
registered in terms of the company laws of the Republic of
South
Africa, with its principal place of business at 12 Commercial Road,
Wadeville, Johannesburg. The eighth respondent is a wholly
owned
subsidiary of the seventh respondent. Prior to April 2005, the eighth
respondent was a joint venture between Sasol and Total
in terms of
which Sasol owned 70% of the issued share capital and Total owned
30%.
1.16.
"Total"
means
TOTAL SA (PTY) LTD ("Total"), a company duly incorporated
and registered in terms of the company laws of the Republic
of South
Africa, with its principal place of business at Total House, 3
Biermann Avenue, Rosebank, Johannesburg.
1.17.
"Thbunar
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 3
rd
Floor, Mutayo building (Block C), the dti Campus, 77 Meintjies
Street, Sunnyside, Pretoria, Gauteng.
2.
The
Complaint and Complaint Investigation
2.1.
On 10 September 2008,
Sasol
together
with its subsidiaries, including Tosas, applied for and subsequently
obtained conditional immunity in terms of paragraph
12 of the
applicant's
CLP,
in
respect of their participation in the development of, and agreement
to adopt, a pricing mechanism in respect of the saie of base
bitumen
and bituminous products.
2.2.
In its application for leniency
Sasol
alleged
that it, together with
Chevron,
Engen, Shell, Total, Masana
and
Tosas
being
parties in a horizontal relationship, had contravened section
4{1)(b)(i) of the Act by engaging in price fixing by agreeing
to a
mechanism to calculate the WLSP (Wholesale List Selling Price), and
to the development and implementation of the BPAF (Bitumen
Price
Adjustment Factor) in relation to the sale of base bitumen and
bituminous products.
2.3.
On 12 January 2009, and pursuant to
Sasol's
leniency
application, applicant initiated a complaint in terms of section
49(B) (1) of the Act against the respondents. The applicant
conducted
an investigation into the relevant facts disclosed by
Sasol
and
concluded that
Chevron,
Engen, Shell, Total, Masana, Saso!
and
Tosas
had
indeed engaged in restrictive horizontal practices, in contravention
of section 4(1)(b)(i) of the Act.
2.4.
The Commission's investigation revealed that;
2.4.1
In and during the period commencing from September 2000 to December
2009, and possibly thereafter,
Chevron,
Engen, Shel!, Total, Masana, Sasol
and
Tosas,
being
parties in a horizontal relationship, acting through their
representatives, entered into various agreements, and engaged in
conduct that involved concerted practices and/or took decisions that
were intended to directly and indirectly fix the purchase
or selling
price of bitumen and bituminous products in the Republic in
contravention of section 4(1)(b)(i) of the Act.
2.4.2.
Chevron, Engen, Shell, Total, Sasol
and
Tosas
are
producers and / or suppliers of bitumen, and compete with one another
in the production and / or sale of bitumen and bituminous
products in
the Republic.Chevron, Engen, Shell, Total, and Sasol are also members
of
SABITA,
a
non profit organisation that represents
inter
alia
producers
of and applicators of bituminous products.
2.4.3.
The respondents, operating through
SABITA,
as
well as through other forms of communications, including bilateral
communications between them agreed a formula for determining
the
pricing of base bitumen and bituminous products.
2.4.4.
Historically, the petroleum and energy companies calculated the
prices for bitumen with reference to an industry-wide retail
price
list for bitumen and bituminous products. This was calculated
collectively by all petroleum companies and was referred to
as the
Wholesale List Selling Price ("WLSP").
2.4.5.
The WLSP for bitumen was made up of the In Bond Landed Costs
("IBLC"), which essentially was an import parity based
formula where various transport related costs were added to a Free on
Board ("FOB") heavy fuel oil price at typical international
refining centres. This base price was replaced finally by the Durban
Bunker price. Added to the IBLC to arrive at the WLSP were
the SABITA
levy, the margin and the Road Equalisation Factor ("REF"),
which was subsequently replaced by the Crude Oil
Pipeline tariff.
2.4.6
Chevron,
Engen, Shell, Total, Masana, Sasol
and
Tosas
and
other role players in the industry, in contravention of section 4 of
the Act, discussed the establishment of a mechanism to
set the WLSP
of bitumen in relation to the Bitumen Pricing index. The respondents
adopted the BPAF as a basis for price escalations
in their contracts
with end consumers
3.
The
Complaint Referral
3.1.
The
Commission
referred
the above complaint to the
Tribunal
on
4 March 2010.
3.2.
Prior to the referral,
Masana,
approached
the
Commission
indicated
its willingness to settle the matter and in addition provided the
Commission with information pertaining to its role in
the cartel. The
Settlement
Agreement
was
concluded as a result of
Masana's
engagement
with the
Commission.
4.
Statement
of Conduct
4.1.
Masana
admits
that it has contravened section 4{1){b)(i) of the Act, in that:
4.2.
Masana
and
its competitors
4.2.1.
met and shared competitively sensitive information relating to the
pricing of bitumen and associated products;
4.2.2.
made use of a common platform to transparently share and exchange
pricing information;
4.2.3.
used, made use of and implemented the agreed pricing formulae.
4.3
The
Corporate Senior Management of
Masana
confirm
that, to the best of their knowledge and belief, there are no further
contraventions of section 4 of the
Act,
which
were and
for
might
have been engaged in by
Masana.
5.
Agreement
Concerning Future Conduct
5.1.
Masana
agrees
to cooperate with the
Commission
in
relation to the prosecution of any other parties under the
Complaint
Referral.
This
cooperation includes and is not limited to the provision of evidence
(documentary and oral), pertaining to the contraventions
detailed in
this Settlement Agreement and the provision of witnesses to testify
to this conduct in proceedings before the
Tribunal.
5.2.
Masana
agrees
to:
5.2.1.
circulate a statement summarising the contents of this Settlement
Agreement to ail management and operational staff employed
in its
business within 30 days from the date of confirmation of this
Settlement Agreement by the Tribunal;
5.2.2.
develop and implement a compliance programme incorporating corporate
governance designed to ensure that its employees, management
and
directors do not engage in any conduct which constitutes a prohibited
practice in terms of the Act, a copy of which programme
shall be
submitted to the Commission within 60 days of the date of
confirmation of this Settlement Agreement by the Tribunal;
6.
Administrative Penalty
6.1
Having
regard to the provisions of sections 58(1)(a)(iii) as read with
sections 59(1)(a), 59(2) and 59(3) of the Act,
Masana
accepts
that it is liable to pay an administrative penalty.
The
parties have agreed that Masana will pay an administrative penalty in
the amount of R13 000 000, 00 (thirteen million rand)
6.2
This
amount does not exceed 10% of
Masana's
annual
turnover in the Republic and its exports from the Republic during
the preceeding financial year.
6.3
Masana
will
pay the amount set out in paragraph 8.1 above to the Commission
within six months from the date of confirmation of this Settlement
agreement by the Tribunal. This amount will be paid over by the
Commission to the National Revenue Fund, referred to in section
59{4)
of the Act.
7.
Full and Final Settlement
This
agreement, upon confirmation as an order by the Tribunal, is entered
into in full and final settlement and concludes all proceedings
between the Commission
Masana
relating
to any alleged contravention by the respondents of the Act that is
the subject of the Commission's investigation referred
to the
Tribunal under CT Case No. 06/CR/Mar10
Dated
and Signed at
PARKTOWN
on the
20
th
day
of
MAY
2010
For
Masana
Chief
Executive Officer
For
the Commission
Competition
Commissioner