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[2011] ZACT 50
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Competition Commission v NWK Ltd (44/CR/Jun11) [2011] ZACT 50; [2011] 2 CPLR 275 (CT) (14 July 2011)
COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case No: 44/CR/Jun11
in the matter between:
The
Competition Commission
…............................................................................
Applicant
and
NWK Limited
Panel
N Manoim
(Presiding Member), Y Carrim (Tribunal Member), and A Wessels
(Tribunal Member)
Heard on : 15 June 2011
Decided on : 14 July 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. 44/CR/Jun11
CC Case No. 2008Oct4045
In
the matter between:
THE
COMPETITION COMMISSION
…................................................................
Applicant
and
NWK
LIMITED
…..................................................................................................
Respondent
In
re:
COMPETITION
COMMISSION
….........................................................................
Applicant
and
NWK
LIMITED
….........................................................................................
First
Respondent
RAND
MERCHANT BANK,
A
DIVISION OF FIRSTRAND BANK LIMITED
….............................
Second
Respondent
CONSENT AGREEMENT IN TERMS
OF SECTION 49D READ WITH SECTION 58(1)(a)(iii) AS READ WITH SECTION
58(1)(b) OF THE COMPETITION ACT
1998 (ACT NO 89 OF 1998), AS
AMENDED, BETWEEN THE COMPETITION COMMISSION AND NWK LIMITED, IN
REGARD TO AN ALLEGED CONTRAVENTION
OF
SECTION 4(1)(b)(H)
OF THE
COMPETITION ACT, 1998
The
COMMISSION
and
NWK
LIMITED
hereby
agree that application be made to the Competition Tribunal for the
confirmation of a 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,
Muiayo Building (Block C), the dti Campus, 77 Meintjies Street,
Sunnyside, Pretoria, Gauteng;
1.3.
"Commissioned
means
the Commissioner of the Competition Commission, appointed in terms
of section 22 of the Act;
1.4.
"Complain?
means
the complaint initiated by the Commissioner of the Competition
Commission in terms of section 49B of the Act under case
number
2008Oct4045;
1.5.
"Consent Agreement"
means
this agreement duly signed and concluded between the Commission and
NWK Limited ("NWK");
1.6.
"FirstRand"
means
FirstRand Bank Limited, a company registered and incorporated in
accordance with the iaws of the Republic of South-Africa
with
registration number 1929/001225/06 and with its registered office at
1st Floor, 4 Merchant Place, Sandton, 2146, South Africa;
1.7.
"NWK"
means
NWK Limited, a company registered and incorporated in accordance
with the laws of the Republic of South-Africa with registration
number 1998/007577/06 and with its registered address, alternatively
principal place of business at 81 Scholtz Street, Lichtenburg,
2740,
South-Africa;
1.8.
"Parties"
means
the Commission and NWK;
1.9.
"Respondents"
means
both RMB and NWK;
1.10.
"RMB"
means
Rand Merchant Bank, a division of FirstRand Bank Limited and with
its registered address, alternatively principal place
of business at
1 Merchant Place, c/o Fredman Drive and Rivonia Road, Sandton, 2196,
South Africa. RMB is a diversified financial
services brand
encompassing investment banking, fund management, private wealth
management and advisory services. RMB is involved
in the
agricultural industry in that it engages in paper trading, it also
provides brokering (and related) services and financing
options to
its clients in the agricultural industry;
1.11
"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. During October 2008 the
Commission initiated a complaint against the respondents in respect
of allegations that the respondents
had contravened section
4(1)(b)(ii) of the Act in that they have divided the market in which
they compete by allocating territories
and/or customers.
2.2. The Commission conducted
its investigation and found that RMB and NWK are both engaged in the
business of trading grain on
the South African Futures Exchange
(SAFEX) and in the physical market. As such, they are competitors
and are in a horizontal
relationship within the meaning of the Act.
RMB and NWK entered into an agreement on 29 April 2005 in respect of
grain owned
by RMB and stored in NWK silos.
2.3. The
background to the agreement was the following:
That RMB had stored 450, 000
tons of grain at various NWK-owned silos; « This represented
close to 47 percent of all grain
stored in the NWK silos;
The RMB stock was a carry-over
from the previous harvest season;
NWK realised that it would
face capacity constraints, given the expected bumper crop in the
2005 harvest season. That is, unless
additional storage space would
be created, NWK would not be in a position to accept new grain in
some of its silos where RMB
grain was stored;
Thus, NWK and RMB agreed terms
upon which certain RMB grain was to be reaiiocated to alternative
silos, certain RMB grain would
be swapped for NWK grain and NWK was
given the opportunity to sell certain RMB grain as well as other
incidental matters.
The agreed terms were recorded
in a signed agreement.
2.4. More specifically, the
contract between RMB and NWK contains the following agreement:
172 902 tons of grain would be
transferred by NWK to alternative storage locations;
127, 864 tons of grain would
be sold by RMB to NWK;
67, 000 tons of grain would be
swapped with grain at the other NWK storage locations;
•
140,
069 tons of grain will be moved by RMB to silos not owned by NWK;
RMB will deliver and store a
further 20, 000 tons of grain at NWK's Kameel Silo; and
•
RMB
granted NWK a sole mandate to sell the transferred and swopped grain
to third parties via a tender process.
2.5
RMB also
undertook not to self the grain stored in Agriserve silos in South
Africa or Botswana because that grain was tied up
in a similar
agreement with another storer of grain. The relevant clause 4.4 of
the agreement reads as
follows:
"RMB hereby undertakes
that the grain which is relocated from the current locations to
siios owned by Agriserve will not
be sold to any person or
organization in the Republic of South Africa or Botswana before 1
May 2007,"
2.6. This clause 4.4 of the
agreement implicates or may constitute an agreement by competitors
not to compete in a particular
market for a particular period.
2.7. In light of its findings,
the Commission took a decision to refer the complaint concerning the
allegation of market allocation
in contravention of section
4(1)(b)(ii) to the Tribunal for adjudication.
3.
Statement
of conduct by NWK
NWK admits that the terms of
clause 4.4 of the aforesaid agreement could be interpreted as a
contravention of section 4(1)(b)(ii)
of the Act.
4.
Administrative
Penalty
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, NWK
accepts that it is liable to
pay an administrative penalty.
The parties have agreed that
NWK will pay an administrative penalty in the amount of R520 290
(five hundred and twenty thousand,
two hundred and ninety rand).
4.2. This amount constitutes 3%
(three per cent) of the value of grain affected by clause 4.4 of the
aforesaid agreement.
4.3. NWK wilf pay the amount
set out in paragraph 4.1 above to the Commission upon the date of
confirmation of this Consent agreement
by the Tribunal.
4.4. 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
Brach Code:
323 345
4.5. The penalty 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. NWK agrees to fully
cooperate with the Commission in relation to the prosecution of the
complaint referral. Without limiting
the generality of the
foregoing, NWK 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. NWK agrees that it will in
future refrain from the provision of contractual undertakings that
may contravene section 4(1
)(b) of the Act.
5.3. 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, such compliance
programme will include the following:
5.3.1. a competition policy to
be drafted and implemented by NWK;
5.3.2. provide specific
training on competition law aspects particularly relevant to NWK, to
its members;
5.3.3. ensure that such
training will be made available to all new employees joining NWK.
Furthermore, NWK will update such training
annually to ensure on an
ongoing basis that it will not be used as a platform where its
members can engage in any collusive activities;
5.4.
The
submission of a copy of such compliance programme to the Commission
within 60 days of the date of confirmation of the
Consent
Agreement
as
an order by the Competition 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 NWK relating to any alleged contravention by the
respondents of the Act that is the subject
of the Commission's
investigation (Case No. 2008Oct4045).
Dated and
signed at
Lichtenburg
on the
27
day of
May
2011
FOR NWK LIMITED
MR
D. F. MARAIS
MANAGING
DIRECTOR
MR
J.A. GROBBELAAR
OPERATIONAL
DIRECTOR
For
the Commission
Competition
Commissioner
Pretoria
3 June 201