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[2011] ZACT 34
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Competition Commission v Tuinroete Agri Ltd; Competition Commission v Afgri Operations Ltd and Others (43/CR/Jun11) [2011] ZACT 34; [2011] 1 CPLR 123 (CT) (15 June 2011)
COMPETITION
TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No:43/CR/Jun11
In
the matter between:
The Competition Commission
…..................................................................................
Applicant
and
Tuinroete Agri Limited
…........................................................................................
Respondent
Panel
N
Manoim (Presiding Member), Y Carrim (Tribunai
Member), and A Wessels (Tribunal Member)
Heard on : 15 June 2011
Decided on : 15 June 2011
The Tribunal hereby confirms the order as agreed to and
proposed by the Competition Commission and the respondent, annexed
hereto
marked "A".
Presiding
Member
N Manoim
Concurring:
Y
Carrim and A Wessels
IN
THE
COMPETITION
TRIBUNAL OF SOUTH AFRICA
HELD IN
PRETORIA
CT Case No.
CC Case No. 2009Mar4349
In the matter between:
THE
COMPETITION COMMISSION
…................................................................................
Applicant
and
TUINROETE
AGRI LIMITED
….................................................................................
13
th
Respondent
In
re:
THE
COMPETITION COMMISSION
…................................................................................
Applicant
and
AFGRI OPERATIONS LIMITED
…..............................................................................
1
st
Respondent
SENWES
LIMITED
….....................................................................................................
2
nd
Respondent
NWK
LIMITED
…............................................................................................................
3
rd
Respondent
OVK
OPERATIONS LIMITED
…..................................................................................
4
th
Respondent
SUIDWES (PTY) LIMITED
…........................................................................................
5
th
Respondent
VRYSTAAT
KOOPERASIE BEPERK
…......................................................................
6
th
Respondent
OVERBERG
AGRI (PTY) LIMITED
….........................................................................
7
th
Respondent
DIE
HUMANSDORPSE KOOPERASIE BEPERK
…..................................................
8
th
Respondent
SENTRAAL-SUID
KOOPERASIE BEPERK
…............................................................
9
th
Respondent
GWK LIMITED
…..........................................................................................................
10
th
Respondent
KAAP
AGRI BEDRYF LIMITED
…............................................................................
11
th
Respondent
MGK
BEDRYFSMAATSKAPPY (PTY) LIMITED
…...............................................
12
th
Respondent
TUINROETE
AGRI LIMITED
….................................................................................
13
th
Respondent
MOREESBURGSE
KORINGBOERE (EDMS) BEPERK
….....................................
14
th
Respondent
TWK
LAND BOU BEPERK
…......................................................................................
15
th
Respondent
NTK
LIMPOPO AGRIC BEPERK
…...........................................................................
16
th
Respondent
GRAIN SILO INDUSTRY (PTY) LIMITED
…...........................................................
17
th
Respondent
CONSENT
AGREEMENT IN TERMS OF SECTION 49D READ WITH SECTION 58{1)(a)(iii)
and 58(1)(b) OF THE COMPETITION ACT, 1998 (ACT NO. 89
OF 1998), AS
AMENDED, BETWEEN THE COMPETITION COMMISSION ("THE COMMISSION")
AND TUINROETE AGRI LIMITED ("TUINROETE"),
IN RESPECT OF AN
ALLEGED CONTRAVENTION OF SECTION 4(1)(b)(i) OF THE COMPETITION ACT,
1998 ("THE ACT").
The
Commission
and
Tuinroete
hereby
agree that application be made to the
Tribunal
for the
confirmation of this
Consent
Agreement
in terms
of section 58 (1){a)(iii) as read with section 58(1)(b) 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
Consent
Agreement
the
following definitions shall apply:
1.1.
"Act
means the
Competition Act, 1998 (Act No. 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 1
st
Floor, Mulayo Building (Block C),
the dti Campus, 77 Meintjies Street, Sunnyside, Pretoria, Gauteng;
1.3. "Commissioner"
means the
Commissioner of the Commission, appointed in terms of section 22 of
the Act;
1.4. "Complainf
means
the complaint under case number 2009Mar4349 initiated by the
Commissioner in terms of section 49B of the
Act,
including a
complaint concerned with allegations of price fixing in terms of
section 4(1)(b)(i) of the Act initiated on 17 March
2009 as well as
an expanded initiation on 25 May 2010 after the decision was made to
include all the members and shareholders
of the Grain Silo Industry;
1.5.
"Consent
Agreement"
means
this agreement duly signed and concluded between the Commission and
Tuinroete;
1.6.
"Grain
Silo Industry (Pty) Ltd"
is
a private company duly incorporated in accordance with the company
laws of the Republic of South Africa, having its registered
offices
at Lynwood Corporate Park, Alkantrantstraat, Lynwood Manor,
Pretoria, Gauteng Province. The GSI represents its members
in public
forums wherein matters related to the storage and trading of grain
and oilseeds are discussed and provides specialist
research services
that members may request on an ad-hoc basis. The GSI represents its
constituent members in interactions with
the Agricultural Products
Division of the Johannesburg Stock Exchange (the "APD"
previously "SAFEX").
^
1.7. "Tuinroete"
means
Tuinroete Agri Limited, a company registered and incorporated in
accordance with the iaws of the Republic of South-Africa
with
registration number 1997/003183/06 and with its registered office,
in the alternative its main place of business, at cnr
Louis Fourie
and Industrie Road, Mossei Bay, Western Cape, 6506;
1.8. "Parties"
means
the Commission and Tuinroete;
1.9. "Respondent"
means for
purposes of this agreement Tuinroete;
1.10. "Respondents"
means
Respondents one (1) to seventeen (17) described above;
1.11. "Safex"
means
the the South African Futures Exchange which was established to
provide market participants with a price determination mechanism
and
a price risk management facility through which they can manage their
exposure to adverse price movements in the underlying
commodity.
1.12. "Tribunat
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* Floor, Muiayo building
(Block C), the dti
Campus, 77 Meintjies Street, Sunnyside, Pretoria, Gauteng.
2.
The Complaint and Complaint
Investigation
2.1. On 17 March 2009 the
Commissioner
initiated a
complaint against Afgri Operations Limited ("Afgri"),
Senwes Limited ("Senwes"), Noord-Wes Kooperasie
Limited
("NWK"), OVK Operations Limited ("OVK"), Suidwes
(Pty) Limited ("Suidwes"), Vrystaatse
Kooperasie Limited
("VKB") and the Grain Silo Industry ("GSI") for
alleged contravention of section 4(1)(b)(i)
of the Act.
2.2. The investigation revealed that
the storage rate is agreed to and assented to not only by the
entities against whom the original
complaints initiation was made,
but by all members and shareholders of
GSf.
In the
circumstances, on 25 May 2010 the
Commissioner
expanded the
investigation to refer to all seventeen (17) respondents.
2.3. The
Commission
conducted its
investigation and concluded that:
2.3.1. the
respondents
and GSi have
contravened section 4(1)(b)(i) of the Act. The essence of the
conduct complained of is that the respondents and
GSI
have contravened
section 4(1)(b)(i) of the Act in that they fix the prices of the
daily storage tariff for the storage of grain.
This is done for
application throughout the Republic. The first to sixteenth
respondents
are
all former cooperatives who own grain storage silos and provide
other agricultural services and are competitors in the market
for
grain storage.
2.4. The
Commission
found that:
2.4.1. Notwithstanding the fact that
they are competitors, the first to sixteenth
respondents
are alt
shareholders or members of the
GSi,
Although the
GSI
is a private
company, it amounts to an industry association for members of the
grain storage industry.
SAFEX
placed the onus
for the determination of the storage rate on the
GSI
on the basis that
it had the necessary knowledge and understanding of the costs
involved in providing storage. Until 2008,
SAFEX
requested the
standardised tariff from the
GSi
on an annual
basts. In 2008, as is set out below, the
GSi
declined to
provide the standardised storage tariff to
SAFEX
any longer on
account of the
Commission's
contentions that
it and its members were contravening section 4(1)(b)(i) of the Act.
2.4.2. It was the
GSf's
technical
committee that was responsible for fixing the daily storage tariff
on behalf of the
GS!
and its members.
In response to requests from
SAFEX,
the
GSI
consulted its
shareholders. The shareholders submitted individual proposals as to
the appropriate storage rate to
GSf,
These rates were
collated and evaluated by the
GSi's
technical
committee, the members of which are from competing silo companies.
The technical committee then decided on a rate and
this was then
submitted to
SAFEX
on behalf of GSI
and its shareholders.
2.4.3. The essence of the conduct
complained of is that the. daily storage tariff proposed by
GSi
is agreed to and
assented to by all of the respondents. Given that the first to
sixteenth respondents are all competitors in the
provision of
storage services, the joint determination of the daily storage rate
amounts to prohibited price fixing in that it
quite simply amounts
to an agreement between firms in a horizontal relationship for the
direct fixing of storage prices.
2.4.4.
The
manner in which the
SAFEX
storage tariff is
determined is, in the Commission's view, restrictive of competition.
In addition to agreeing to the
SAFEX
rate, the
respondents exchanged detailed cost information In addition, the
storage tariff determined for
SAFEX
purposes has been
used to determine storage fees in respect of sales transactions in
the physical market. This amount to collusion.
2.5.
The
Commission
took
a decision to refer to the
Tribunai
its complaint that
is described above.
3.
Statement of conduct by Tuinroete
Tuinroete
admits
that it participated, as a member of the GSI, in the fixing of the
daily grain storage tariff in contravention of section
4(1)(b)(i) of
the Act as described above.
4.
Administrative Penalty
4.1. 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,
Tuinroete
accepts that a
contravention of section 4{1)(b)(t) may lead to the imposition of an
administrative penalty where the
Tribunat
deems it
appropriate.
4.2. The parties have agreed that
Tuinroete
will
pay an administrative penalty in the amount of R 48 048.87.
4.3. This amount constitutes 4% (four per cent) of the
total grain silo storage turnover for the 2009/2010 financial year;
4.4. Tuinroete
will
pay the amount set out in paragraph 4.2 above to the
Commission
upon the date of
confirmation of this
Consent
Agreement
by the
Tribunal.
4.5. This payment shall be made into
the
Commission's
bank account,
details of which are as follows:
Bank name:
Absa
Bank
Branch name:
Pretoria
Account holder:
Competition Commission Fees Account
Account number:
4050778576
Account type:
Current
Account
Branch Code:
323
345
4.6.
The
payment will be paid over by the
Commission
to the National
Revenue Fund in accordance with section 59(4} of the Act.
5.
Agreement
Concerning
Future Conduct
5.1.
Tuinroete
agrees to fully
cooperate with the
Commission
in relation to the
prosecution of the complaint referral Without limiting the
generality of the foregoing,
Tuinroete
specifically
agrees to:
5.1.1.
Testify
in the complaint referral (if any) in respect of alleged
contraventions covered by this
Consent Agreement;
and
5.1.2.
To
the extent that it is in existence, provide evidence, written or
otherwise, which is in its
possession or under its control, concerning the alleged
contraventions contained in this
Consent
Agreement.
Tuinroete
agrees
that it will in future refrain from the provision of contractual
undertakings that have the potential to constitute contraventions
of section 4(1)(b) of the Act.
Tuinroete
shall
develop, implement and monitor a competition law compliance
programme incorporating corporate governance designed to ensure
that its employees, management, directors and agents do not engage
in future contraventions of the
Competition Act. In
particular,
Tuinroete
shall:
I
5.3.1.
draft and implement a competition policy and compliance programme;
5.3.2.provide
training on competition law compliance on issues particularly
relevant to
Tuinroete
and its employees
and officials;
5.3.3.provide
training on competition law compliance to all persons and/or
officials employed by
Tuinroete
after the
confirmation of this
Consent
Agreement
by the
Tribunal;
5.3.4.update
the competition policy and training annually to ensure
Tuinroete's
continued
compliance with the Act.
5.4.
Tuinroete
shall submit a
copy of such compliance programme to the Commission within 60 days
of the date of confirmation of the
Consent
Agreement
by the
Tribunal.
6.
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
and
Tuinroete
relating
to any alleged contravention by the
Respondents
of the Act that is
the subject of the
Commission's
investigation
under case no 2009MAR4349.
Dated and signed
Mossel
Bay
on the
8
t
h
day of a
June
2011
For
Tuinroete
CEO (J.D.
Wys)
For the
commission
Competition
Commissioner