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[2010] ZACT 46
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Competition Commission v Power Metals Recyclers (Pty) Ltd (37/CR/Apr08) [2010] ZACT 46; [2010] 2 CPLR 269 (CT) (14 July 2010)

COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No: 33/CR/Jun10
In
the matter between:
The
Competition Commission
….............................................................................
Applicant
and
Power
Metals Recyclers (Pty) Ltd
…........................................................................
Respondent
Panel
: N Manoim (Presiding Member), A Wessels (Tribunal
Member),
and M Madlanga (Tribunal Member)
Heard
on 14 July 2010
Decided
on : 14 July 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
A
Wessels and M Madlanga concurring
IN
THE COMPETITION TRIBUNAL OF SOUTH AFRICA
CT
Case No: 37/CR/Apr08
CC
Case No: 2006Aug2447 and Case No: 2007Aug3121
In
the
matter
between;
THE
COMPETITION COMMISSION
…........................................................................................
Applicant
And
POWER
METAL RECYCLERS (PTY) LTD
…..............................................................................
Respondent
CONSENT
AGREEMENT BETWEEN THE COMPETITION COMMISSION AND POWER WIETAL
RECYCLERS (PTY) LTD IN TERMS OF SECT.ON 49D READ WITH SECTION
49D
READ WITH SECTION 58(1)(b)
OF
THE
COMPETITION ACT, NO. 89 OF
1998,
AS
AMENDED
The
Competition Commission of South Africa and Power Metal Recyclers
(Pty) Ltd hereby agree that application be made to the Competition

Tribunal for confirmation of this Consent Agreement as an order of
the Tribunal in terms of section 49D read with
section 58(1)
(b) of
the
Competition Act, No. 89 of 1998
, as amended, on the terms set
out below.
1.
Definitions
For
the purposes of this consent order agreement the following
definitions shall apply:
1.1,
"Abeddac" refers to Abeddac Metals (Pty) Ltd, a
company
duly
incorporated and registered in accordance with the laws of the
Republic of South Africa with its principal place of business
at
15
th
Avenue,
Benoni Gauteng and carrying on business as a dealer in ferrous
scrap;
,f
the
Act" means the
Competition Act, No. 89 of 1998
, as amended;
1.3.
"Amalgamated Metals" means Amalgamated Metals Recycling
cc, a close corporation duly
incorporated
and
registered in terms of the close
corporation
laws
of the Republic of South Africa, with its principal place of
business at 100 4
th
Street
Booysens Reserve Johannesburg and carrying on business as a scrap
dealer;
1.4.
"Ben Jacobs" means Ben Jacobs Metals (Pty) Limited, a
company
My
incorporated
and registered in accordance with the laws of the Republic of
South
Africa
with its principal place of business at 25 Plantation Road,
Johannesburg. Where conduct is alleged to involve Ben Jacobs
or
Power Metals it must be read to involve either of them in the
alternative. Ben Jacobs is a shareholder of Power Metals;
1.5.
"Cisco" refers to Cape Town Iron and Steef Works (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 Fabriek Street, Kuilsrivier, Cape Town. Cisco is

involved in the business of producing steel products from processed
ferrous scrap which it requires as a raw material;
1.6.
"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,
Mul
ayo
Building
(Block
C), the dti Campus, 77 Meintjtes Street, Sunnyside, Pretoria,
Gauteng;
1.7.
"Commissioner" means the Commissioner of the Competition
Commission, appointed in terms of
section 22
of the
Competition Act;
1.8.
"Complaints" means the complaint initiated by the
Commissioner of the Commission in terms of
section 49B
of the Act
under
case
number 2006Aug2447 (as extended by the Commission on 6 July 2007)
and 2007Aug3121 and any other complaints of prohibited
conduct
arising
from the
conduct
described
in the Report or this Consent Order Agreement;
1.9.
"Consent Agreement" means this agreement duly signed and
concluded between the parties to the agreement;
1.10.
"DTI" means the Department of Trade and industry;
1.11.
"Ferrous Scrap Metal" refers to metals that include iron
and all iron derivatives;
1.12.
"Non-Ferrous Scrap Metal* refers to metals or alloys that are
free of iron;
1.13.
"Inland area" refers to a
territory
defined
as the provinces of Gauteng, Free State; North West; Northern
Province; Mpumalanga and KwaZulu-
Hatal
but
excluding those parts of the province south of Newcastle, the states
of Lesotho and Swaziland and all African states north
of South
Africa's boundaries, excluding Namibia;
1.14.
"NSM"
refers to National Scrap Metal (Cape Town) (Pty) Ltd, a company duly
incorporated and registered in terms of the
company laws of
South
Africa, with its principal
place
of business at Fabriek Street, Kuilsrivier, Cape Town. NSM is a
company with
Wmited
liability,
in which Reclam has 40% shareholding. NSM is engaged in the business
of collecting and processing all types of scrap
metal including
ferrous and non-ferrous scrap;
1.15.
"Parties to the agreement" refers to the Commission and
Power Metals;
1.16.
"Reclam" means The New Reclamation Group (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 263 Oxford Road, Illovo, Johannesburg.
Reclam is engaged
in the business of collecting and processing of scrap metal;
1.17.
"Report" means the report on the investigation conducted
by Reclam into its scrap metai activities, dated 31 January
2008;
1.18.
"Respondent" or "Power Metals" means Power Metal
Recyclers (Pty) Ltd;
1.19.
"SAM" means SA Meta! & Machinery Company (Pty) Ltd, a
company duly registered in terms of the company laws
of the Republic
of South Africa with its principal place of business at 14 Christian
Avenue, Epping Industria, and Cape Town.
SAM is involved in the
business of collecting ferrous and non-ferrous scrap meta! for its
own smelting purposes, for the sale
to local smelters and for export
markets;
1.20.
"Scrap" means non ferrous scrap metal used as an input in
the manufacture of steel and steel products;
1.21.
"suppliers" means suppliers of scrap meta! to consumers of
scrap meta! such as mills and foundries;
1.22.
"Superyard” means a large yard capable of handling
substantial volumes of scrap;
1.23.
"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 3
rd
Floor,
Mulayo building (Block C), the dti Campus, 77 Meintjies
Street,
Sunnyside,
Pretoria, Gaufeng;
1.24.
"Universal"
refers to Universal Recycling (Pty) Limited, a company
duly
registered in terms of the company laws of the Republic of
South Africa with its
principal
place of
business
at 4 Bompas Road, Dunkeld West Johannesburg. Universal is involved
in the business of processing,
trading
and
transportation of ferrous and non ferrous
scrap
metal
2.
The Complaints and the Commission's Investigation
2.1.
During
August 2006, the Commissioner initiated a complaint under
Case
number 2006Aug2447 in respect of alleged prohibited
practices in
contravention of sections 4 and 5 of the Act,
against a number of scrap
processors and merchants including
Reclam, SAM, NSM and Cisco.
2.2.
The
initiation was based on
allegations
that
certain
arrangements submitted on 21 October 2005
to
the
Commission in respect of a large merger filing in which Reclam
proposed to acquire the businesses of SAM and its associated
company
Waste
Control
(Pty)
Ltd, constituted price fixing,
market
allocation
and exclusive dealing in contravention of section 4(1) (b) (i) and
(it) and 5(1) of the Act respectively in relation
to ferrous and
non- ferrous scrap
metal
Extension
of the first complaint
2.3.
During
the course
of
the investigation, the Commissioner,
acting
in
terms of section 49A of the Act, issued summons against Reclam. On
the basts of the information submitted by Reclam to the
Commission,
the Commission
expanded
the
scope
of
the
investigation under Case No 2006Aug2447 to include collusive
tendering in contravention of section 4{1){b)(m) against Reclam,

NSM, SAM, LO Rail Scrap Dealers cc, Universal and Fine Trading cc.
2.4.
On 20 July 2007, the Commission obtained search
warrants
arid
conducted
search and
seizure
operations at
the
premises of Reclam in Johannesburg, Port Elizabeth and Durban. Soon
thereafter, the Commission received information that Reclam;
Abeddac
Metals (Pty) Ltd; Amalgamated Metals Recycling; Ben Jacobs; Power
Metals, SAM and Universal were engaged in price fixing
and collusive
tendering in respect of various types of non-ferrous scrap metal.
The information showed that Reclam had sent an
email to its
competitors confirming that all of them agreed to maximum buying
levels for millberry, berry, birch/cliff, heavy
brass, Al cast and
old rolled, all of which are different types of non-ferrous scrap.
2.5.
On 8 August 2007 the Commission initiated another complaint (under
case number 2007AUG3121) against the respondents referred
to in
paragraph 2.4 above. This complaint was initiated because the
Commission had established that certain respondents and other
firms
were likely involved in specific contraventions of the
Competition
Act, which
were not identified at the time of the
)nit)a\
initiation
of the complaint. Based on evidence before the Commission, the
Commission had reason to believe that Rectem; Abeddac
Metals (Pty)
Ltd; Amalgamated Metals Recycling; Ben Jacobs; Power Metals, SAM and
Universal were engaged in price fixing and
collusive tendering in
contravention of
sections 4(1)
(b) (i) and
4
(1) (b) (iii) of the
Competition Act as
amended in
that
these
companies engaged in the
following
conduct:
Agreeing
on prices ("maximum buying levels") under which they will
buy various types of scrap;
Agreeing
to fix maximum buying levels of various types of scrap metal steel
sold at auctions or in the open market.
2.6.
On 22 October 2007, Reclam approached the Commission with a view of
settling
the
above matters. Pursuant to a process of consultation with the
Commission on 01 February 2008, Reclam submitted a report, which

report was intended to deal with the subject matter of the
complaints. On 4 April 2008, Reclam and the Commission concluded a

settlement agreement which settled, as between them, the conduct
which formed the subject matter of the compfafnts and the conduct

described above. In terms of the settlement agreement Reclam agreed
that it will assist the Commission in pursuing the case against
all
the other respondents mentioned above.
2.7.
The settlement agreement between Reclam and the Commission was
subsequently confirmed by the Competition Tribunal on 07 May
2008.
3.
The Commission's findings
3.1
The Commission found that in 2003 Power Metals and its competitors
Reclam; Abbedac; Amalgamated Metals; SAM and Universal,
who are
suppliers and processors of non-ferrous scrap in the inland area,
were involved in contraventions of
section 4(1){b)(i)
in that they:
3.1.1.
held numerous discussions, including discussions about the prices at
which non-ferrous scrap should be sourced. For example,
a fist price
was issued in late 2003 in respect of Gauteng buying prices.. This
was referred to as the "
Gauteng
price arrangement" or "JHB Pricing" or JHB NF
Prices";
3.1.2.
appointed a
selling
committee,
whose responsibility was to set prices at which Greystone, a joint
venture to be set up by the parties, was willing
to pay ("purchase
prices") to the shareholders for the various classes of
non-ferrous scrap sold by the shareholders
to Greystone. The selling
committee also determined the prices at which various classes of
non-ferrous scrap would from iime
to time be sold;
3.1.3.
agreed
to
establish
a non-ferrous Superyard.and, in order to do so, formed a joint
venture (Greystone). The sole business of Greystone was
the buying,
seiiing, transporting and processing of non-ferrous scrap, including
stainless steel and chrome steel scrap.
3.2.
Although the shareholders of Greystone dissolved the joint venture
in June 2004, the Commission's investigation found that
the members
continued to discuss buying levels on an informal basis until at
least 29 May 2007.
4.
Admission of Liability
Power
Metals admits that it has contravened
section 4(1
)(b)(i) of the Act
in that it-agreed with its competitors to fix prices in relation to
certain non ferrous metals, namely Milberry,
Berry, Birchcliff and
Honey which are copper and brass products.
5,
Future Conduct
5.1.
Power Metals confirms that the conduct under investigation has
already ceased and it undertakes:
5.1.1.
to refrain from engaging In the fixing of any trading condition in
contravention of
section 4(1)(b){i)
;
0.91i
n; margin-top: 0.23in; margin-bottom: 0in; line-height: 0.26in">
5.1.2.
not to enforce any of the restrictive clauses of the agreement or
require any of the parties to abide by the aforesaid;
5.1.3.
develop and implement a compliance programme, with corporate
governance, designed
to
ensure
that all its employees are aware of the provisions of the Act and do
not contravene them;
5.1.4.
submit a copy of the compliance programme outlined above to the
Commission within 60 days of the date of confirmation of
this
Agreement as an order of the Tribunal; and
5.1.5.
Co-operate with the Commission in its ongoing investigation of the
scrap metal sector and any subsequent prosecutions of
parties to the
agreements and arrangements which are the subject of this agreement.
This co-operation includes and is not limited
to the provision of
evidence, documentary and oral pertaining to the contraventions
detailed in this consent agreement and the
provision of witnesses to
testify to this conduct in proceedings before the Tribunal.
6.
Administrative Penalty
In
terms of
section 58(1)
(a) (Hi), and
59
(2) and (3) of the Act,
Power Metals is liable to pay an administrative penalty.
The
parties have agreed that Power Metals should pay an administrative
penalty in the amount of R12 773 587.55, being 5% of
Power Metal's
total annual! turnover for the year ended February 2006.
The
penalty amount will be paid by Power Metals within three months of
the date of confirmation of this Settlement Agreement
as an order
of the Tribunal.
The
Commission will pay these sums into the National Revenue Fund in
terms of
Section 59(4)
of the Act.
7.
Full and Final Settlement
This
agreement, upon confirmation as a consent order by the Tribunal, is
entered info in full and final settlement and concludes
ail
proceedings between the Commission and Power Metals and Ben Jacobs
relating to any alleged contraventions by Power Metals
and/or Ben
Jacobs of the Act that are the subject of the Commission's
investigations under case numbers 2006Aug2447 and 2007Aug3121.
Dated
and signed at
GERMISTON
on
the
2
n
d
day
of
JUNE
2010
Chief
Executive Officer
Power
Metals (Pty) Ltd
Dated
and signed at
PRETORIA
on
the
17
th
day
of
JUNE
2010
Mr
Shan Ramburuth
Commissioner:
Competition Commission