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[2010] ZACT 72
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Competition Commission v Fio-tek Pipes and Irrigation (Pty) Ltd (15/CR/Feb09) [2010] ZACT 72 (27 October 2010)
COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No: 15/CR/Feb09
In
the matter between:
The
Competition Commission
Applicant
and
Fio-tek
Pipes and Irrigation (Pty) Ltd
Respondent
Panel
: Y Carrim (Presiding Member), A Wesseis (Tribunal Member)
and M Mokuena (Tribunal Member)
Heard
on : 27 October 2010
Decided
on : 27 October 2010
Order
The
Tribunal hereby confirms the order as agreed to and proposed by the
Competition Commission and the respondent, annexed hereto
marked "A".
Presiding
Member
Y
Carrim
Concurring:
A
Wesseis and M Mokuena
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
and
FLO-TEK
PIPES AND IRRIGATION (PTY) LTD Respondent
In
re:
THE
COMPETITION COMMISSION Applicant
and
DPI
PLASTICS (PTY) LTD First Respondent
PETZETAKIS
AFRICA (PTY) LTD Second Respondent
MARLEY
PIPE SYSTEMS (PTY) LTD Third Respondent
SWAN
PLASTICS CC Fourth Respondent
AMITECH
SOUTH AFRICA (PTY) LTD Fifth Respondent
FLO-TEK
PIPES AND IRRIGATION (PTY) LTD Sixth Respondent
MACNEIL
MOULDING (PTY) LTD Seventh Respondent
ANDRAG
(PTY) LTD Eighth Respondent
GAZELLE
PLASTICS (PTY) LTD Ninth Respondent
SETTLEMENT
AGREEMENT BETWEEN THE COMPETITION COMMISSION AND FLO-TEK PIPES AND
IRRIGATION (PTY) LTD IN REGARD TO CONTRAVENTIONS OF
SECTION 4
(1) (b)
OF THE
COMPETITION ACT 89 OF 1998
The
Competition Commission and Flo-Tek Pipes and Irrigation (Pty) Ltd
hereby agree that an 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) ot the
Competition Act 89 of 1998
, 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 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 principal place of
business at 33 Potgieter Street, Alrode;
1.3.
"Andrag"
means
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, DT( Campus, 77
(Vfeintjies Street, Sunnyside,
Pretoria, South Africa;
1.6.
"Commissioner"
means
the Commissioner of the Competition Commission
appointed in terms
of
section 22
of the Act;
1.7.
"Complaint Referral" means the Complaint referred to the
Tribunal by the Commission under Tribunal 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 Setchetl Road, Roodekop, Germtston;
1.9.
"FLO
-TEK"
means FLO-TEK 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
Allensnek,
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.
"Macneii"
means
Macneii Moulding (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 Noiand House, River Park, Cape Town.
1.13.
"Marley
Pipes"
means
Marley Pipes Systems (Pty) Ltd, a public company registered in
accordance with iaws 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
Petzetakis 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
Polyvmylchloride, a thermoplastic polymer pipe product which is used
in construction.
1.16.
"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 at251 Point Road, Durban;
1.17.
"Settlement Agreement"
means
this settlement agreement duly signed and concluded between the
Commission and FLO-TEK;
1.18.
"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.
On 12 October 2007, the first respondent filed an intermediate
merger notification with the Commission. It intended to merge
with
Incledon Cape (Pty) Ltd.
2.2.
During the course of the merger investigation the Commission found
inter
alia
that
the merging parties were involved in collusive activities in
contravention of the Act. The merger was subsequently prohibited.
2.3.
Prior
to the prohibition of the merger, the first respondent applied for
immunity from prosecution and fines in terms of the Commission's
Corporate 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 itself and the other respondents. The alleged
collusion involved:
2.3.1.
Price fixing;
2.3.2.
Bid rigging; and
2.3.3.
Allocation of markets and/ or customers.
2.4.
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:
2.4.1.
The respondents agreed to fix the discounts that each would give to
customers in contravention of
section 4(1)
(b) (i) of the Act.;
2.4.2.
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
(1)(b)(ii) and (Hi) of the Act.;
2.4.3.
On 02 February 2009 the Commission referred its findings to the
Tribunal under CT case number 15/CR/Feb09.
3.
Settlement
discussions
3.1.
Subsequent to the complaint referral and just prior to the
commencement of the hearing, Flo-tek Pipes admitted that it had
contravened the Act as alleged therein in that during the period
2007, Flo-Tek Pipes and the other respondents, in respect of
PVC
pipes products:
3.1.1.
attended a series of meetings wherein agreements, arrangements
and/or understandings to fix prices and/or price increases
and/or
price discounts in respect of the PVC pipes
-
products
were reached, in contravention of
section 4
(1) (b) (i) of the Act.
3.2.
The conduct referred to above occurred in
inter
alia:
3.2.1.
The Western Cape.
3.3.
This Settlement Agreement is the result of the engagement between
the Commission and Fio-tek.
4.
Admissions
FLO-TEK
admits that it has contravened
section 4
(1)(b) (i) of the Act as
detailed in paragraph 3 above.
5.
Agreement
concerning future conduct
5.1.
FLO-TEK
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, FLO-TEK
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, concerning the
contraventions contained in this settlement agreement.
5.2.
FLO-TEK
agrees to develop and implement a compliance programme incorporating
corporate governance, designed to ensure that employees,
management
and directors within FLO-TEK, 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 Commission within
60 days of the date of confirmation
of this settlement agreement as
an order by the Tribunal
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, FLO-TEK accepts
that it is iiabie to pay an administrative penalty.
6.2.
The parties have agreed that FLO-TEK will pay an administrative
penalty in the sum of R 5 049 433.26 (Five Million and Forty-Nine
Thousand Four Hundred and Thirty-Three Rands, Twenty-Six Cents)
being 6% of FLO-TEK's total turnover in the 2007 financial year.
6.3.
FLO-TEK will pay the penalty amount to the Commission in two equal
payments as follows;
6.3.1.
FLO-TEK will make the first payment within six (6) months of
confirmation of this Settlement Agreement by the Tribunal
and;
6.3.2.
FLO-TEK will make the second payment within twelve (12) months of
payment of the first installment.
6.4
This amount shall be paid into the following bank account;
NAME; THE
COMPETITION COMMISSION FEE ACCOUNT
BANK; ABSA
BANK, PRETORIA
ACCOUNT
NO; 4050778576
BRANCH
CODE 323 345
6.5.
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 FLO-TEK relating to any
alleged contraventions by FLO-TEK 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
Olifantfontein
on this the
20
day
of
September
2010.
Chakrapani
Bandaru
Financial
Officer: FLO-TEK Pipes And Irrigation (Pty) Ltd
Dated
at
Pretoria
on this the
6
day of
October
2010
Shan
Ramburuth
The
Commissioner, Competition Commission