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[2011] ZACT 35
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Competition Commission v Kaap Afgri Bedryf Ltd; In re: Competition Commission v Afgri Operations Ltd and Others (43/CR/Jun11) [2011] ZACT 35; [2011] 1 CPLR 105 (CT) (15 June 2011)
COMPETITION
TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 43/CR/Jun11
In the matter between:
The Competition Commission
….................................................................................
Applicant
and
Kaap Afgri Bedryf Limited
…...................................................................................
Respondent
Panel
:
N Manoim (Presiding Member), Y Carrim (Tribunal
Member), and A Wessels (Tribunal Member)
Heard on : 15 June 2011
Decided on : 15 June 2011
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
M 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
KAAP
AGRI BEDRYF LIMITED
….............................................................................
11
th
respondent
In re:
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 BEPERK
…..................................................................................
13
th
Respondent
MOREESBURGSE KORINGBOERE (EDMS)
BEPERK
…....................................
14
th
Respondent
TWK
LANDBOU BEPERK
…......................................................................................
15
th
Respondent
NTK
LIMPOPO AGRIC BEPERK
…..........................................................................
16
th
Respondent
GRAIN
SILO INDUSTRY
….........................................................................................
17
th
Respondent
CONSENT
AGREEMENT IN TERMS OF SECTION 49D READ WITH SECTION S8(1)(a)(iil)
and 58(1)(b) OF THE COMPETITION ACT, 1998 (ACT NO. 89
OF 1998), AS
AMENDED, BETWEEN THE COMPETITION COMMISSION ("THE COMMISSION")
AND KAAP AGRI BEDRYF LIMITED ("KAAP
AGRI"), IN RESPECT OF
AN ALLEGED CONTRAVENTION OF SECTION 4(1)(b)(i) OF THE COMPETITION
ACT, 1998 ("THE ACT").
The
Commission
and
Kaap
Agri
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 Xb) of the
Competition Act, 1998 (Act No. 89 of 1998), as amended,
on the terms
set out beiow:
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. 'Commissioned
means
the Commissioner of the
Commission,
appointed in terms
of section 22 of the Act;
1.4. "Complaint'
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)(t) 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
Kaap
Agri;
1.6. "Grain Silo
Industry"
means
Grains Silo Industry (Pty) Limited, 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 GS) 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 GSl represents its constituent
members in interactions with the Agricultural Products Division of
the Johannesburg Stock Exchange (the "APD" previously
"SAFEX").
1.7.
"Kaap
Agri"
means
Kaap Agri Bedryf Limited, a company registered and incorporated in
accordance with the laws of the Republic of South-Africa
with
registration number 1995/000336/06 and with its registered office
and main place of business, at 65 Voortrekker Road, Maimesbury,
7300;
1.8.
"Parties"
means
the
Commission
and
Kaap Agri;
1.9. "Respondent"
means for
purposes of this agreement
Kaap
Agri;
1.10. "Respondents"
means
Respondents one (1) to seventeen (17) described above;
1.11. "Safex"
means
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. "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, 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, at the request of
SAFEX,
various
standardised daily storage rates for grain were agreed to and
assented to not only by the entities against whom me original
complaints initiation was made, but by some or all members and
shareholders of
GSI
and recommended to
SAFEX
from
time to time. 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 fixed 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 all
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. Until 2008,
SAFEX
requested on an
annual basis that GSI recommend a standardised grain storage tariff.
SAFEX
placed
the onus for recommending the daily storage rates for grain on the
GSf
on
the basis that
GSf
had the necessary
knowledge and understanding of the costs involved in providing grain
storage. In 2008, as is set out below,
the
GSI
declined to
recommend 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)oftheAct
2.4.2. It was the
GSI's
technical
committee that was responsible for agreeing on the recommended
SAFEX
daily storage
tariff on behalf of the
GSI
and its members,
in response to annual requests from SAFEX to recommend a suitable
storage tariff for the various grain commodities
traded on
SAFEX,
the
GSI
consulted some or
all of its shareholders. The shareholders submitted individual
proposals as to the appropriate SAFEX grain storage
rates to the
GSI.
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 appropriate
rates and these
were then submitted as recommended grain daily storage tariffs to
SAFEX
on
behalf of GSI and its shareholders.
2.4.3.
The essence of the conduct
complained of is that the recommended daily storage tariffs for the
various grain commodities proposed
by
GSI
to SAFEX were
agreed to and assented to by some or all of the respondents. Given
that the first to sixteenth respondents are competitors
in the
provision of storage services, the joint determination of the SAFEX
daily grain storage tariffs 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 grain storage
prices.
2.4.4.
The
manner in which the standardised
SAFEX
daily grain
storage tariffs were determined is, in the Commission's view,
restrictive of competition. In addition to agreeing
to the
SAFEX
daily grain
storage tariffs, the respondents exchanged detailed cost
information. In addition, the daily grain storage tariffs
which were
determined for
SAFEX
purposes have been
used to determine storage fees in respect of sales transactions in
the physical market. This, in the Commission's
view, amounts to
collusion.
2.5.
The
Commission
took
a decision to refer to the
Tribunal
its complaint that
is described above.
3.
Statement
of conduct by Kaap Agri
3.1. Kaap Agri
admits
that, as a member of the
GSI,
it participated to
a very limited extent in agreeing on the standardised daily wheat
storage tariffs which were recommended to
SAFEX
and that the
SAFEX
dally grain
storage tariffs were used in respect of transactions in the physical
market.
3.2. Kaap Agri
was
bona fide
in
its actions and did not intend to contravene the Act It agrees that
its conduct may, inadvertently, have been in contravention
of
section 4(1 )(b)(i) of the Act.
4.
Administrative
Payment
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,
Kaap
Agri
accepts that
a contravention of section 4(1)(b)(i) may iead to the imposition of
an administrative penalty where the
Tribunal
deems it
appropriate.
4.2. in order to settle the matter,
the parties have agreed that
Kaap
Agri
will pay an
administrative penalty in the amount of R1,199,075.36 (one miliion
one hundred and ninety-nine thousand seventy five
rand and thirty
six cents)
4.3. This amount does not exceed 10%
(ten percent) of the total grain silo storage turnover of
Kaap
Agri
for the 2009
financial year.
4.4. Kaap Agri
wili
pay the amount set out in paragraph 4.2 above to the
Commission
upon the first
business day following 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.
Kaap
Agri
agrees to
fully cooperate with the
Commission
in relation to the
prosecution of the complaint referral. Without limiting the
generality of the foregoing,
Kaap
Agri
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
5.2. Kaap Agri
agrees
that it will in future refrain from the provision of undertakings
that have the potential to constitute contraventions
of section 4(1
)(b) of the Act
5.3. Kaap Agri
has
developed, implemented and is monitoring 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,
Kaap
Agri:
5.3.1. has drafted and implemented a competition policy
and compliance programme;
5.3.2. has provided training on
competition law compliance on issues particularly relevant to
Kaap
Agri
and its
employees and officials;
5.3.3. will, when necessary, provide
training on competition law compliance to all persons and/or
officials employed by
Kaap
Agri
after the
confirmation of this
Consent
Agreement
by the
Tribunal;
5.3.4. will update its competition
policy and training annually to ensure
Kaap
Agris
continued
compliance with the Act
5.4.
Kaap
Agri
will submit a
copy of its 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
Kaap
Agri rel
ating
to anv alleged contravention by the
Respondents
of the Act that is
the subject of the
Commission's
investigation
under case no 2009MAR4349.
Dated
and signed at Malmesbury
on
the
23rd
day
of May 2011
For
Kaap Agri
CEO
For
the Commission's
Competition
Commissioner