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[2011] ZACT 59
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Competition Commission v Suidwes Agriculture (Pty) Ltd (43/CR/Jun11) [2011] ZACT 59; [2011] 2 CPLR 298 (CT) (16 August 2011)
REPUBLIC
OF SOUTH AFRICA
Case No: 43/CR/Jun11
In the matter between:
The
Competition Commission
…....................................................................................
Applicant
and
Suidwes
Agriculture (Pty) Ltd
….................................................................................
Respondent
Panel
: N Manoim
(Presiding Member), Y Carrim (Tribunal Member), and A Wessels
(Tribunal Member)
Heard
on D: 16 August 2011
Decided
on :16 August 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
N Manoim
Concurring:
Y
Carrim and A Wessels
IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
HELD IN PRETORIA
CT Case No.
CC
Case No. 2099Mar4349
In the
matter between:
THE
COMPETITION COMMISSION
…................................................................................
Applicant
and
SUIDWES
AGRICULTURE (PTY) LIMITED
…..........................................................
5
th
Respondent
In
re
:
COMPETITION
COMMISSION
….........................................................................................
Applicant
and
AFGRI
OPERATION LIMITED
….................................................................................
1
st
Respondent
SENWES
LIMITED
….....................................................................................................
2
nd
Respondent
NWK
LIMITED
…............................................................................................................
3
rd
Respondent
OVK
OPERATIONS LIMITED
…..................................................................................
4
th
Respondent
SUIDWES
AGRICULTURE (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
BEDRYFSMAATSKAP PY (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 58(1)Ca){iii)
and 58 (1)(b) OF THE COMPETITION ACT, 1998 (ACT NO.
89 OF
1998),
AS
AMENDED,
BETWEEN THE
COMPETITION COMMISSION ("THE COMMISSION") AND SUIDWES
AGRICULTURE (PTY) LIMITED ("SUIDWES"), IN
RESPECT OF AN
ALLEGED CONTRAVENTION OF SECTION 4(1)(b)(i) OF THE COMPETITION ACT,
1998 ("THE ACT').
The
Commission
and
Suidwes
hereby
agree that application be made to the
Tribunal
for the
confirmation of this
Consent
Agreement
in terms
of section 58(1 )(aX»0 as read with section 58(1Xb) 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, 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
sl
Floor, Mulayo Building (Block C),
the dti Campus, 77 Meintjies Street, Sunnyside, Pretoria, Gauteng;
1.3.
"Commissioned
means
the Commissioner of ttia 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)(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 ail the members
and shareholders of
the Grain Silo Industry;
1.5. "Consmt Agreement'*
means this
agreement duly signed and concluded between the
Commission
and
Suidwes;
1.6. "Grain Sito industry"
means Grain Silo
Industry (Pty) Ltd ("GSI"), 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, Atkantrantstraat, 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 interactions with the Agricultural Products Division of the
Johannesburg Stock Exchange (the "APD"
previously
"SAFEX").
1.7. "Suidwes"
means
Suidwes Agriculture (Pty) Limited, a private company registered and
incorporated in accordance with the laws of the Republic
of
South-Africa with registration number 1990/006879/07 and with its
registered office and main pface of business at 5 Voortrekker
Street, Leeudoringstad, North West, 2640.
1.8. "Parties"
means
the
Commission
and
Suidwes;
1.9. "Respondent"
means
for purposes of this agreement
Sw'dwes;
1.10. "Respondents"
means Respondents
one (1) to seventeen (17) described above;
1.11. "SAFBX"
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 dtl Campus, 77 Melntjies 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 COW),
Suidwes,
Vrystaatse
Kooperasie Limited CVKB") and the 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,
-btit by all members and shareholders of GSI. 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)(fa)(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 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.
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 basis. In 2008, as is
set out beiow, 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 GSI's technical
committee that was responsible for fixing the daily storage tariff
on behalf of the GSI 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 coiiated and evaluated by the GSI's technical
committee, the members of which are from competing silo companies.
Tii&i 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 ail of the respondents. Given that the first to sixteenth
respondents are ail competitors in the provision of storage
services,
the joint determination of the daily storage rate amounts
to prohibited price fixing in that it quite simpiy 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 amounts to coliusion.
2.5.
The
Commission
took
a decision to refer to the
Tribunal
its complaint that
is described above.
3.
Statement
of conduct fey Suidwes
3.1. Suidwes
admits
that, as a member of the GSI, it participated to a very limited
extent In agreeing on the standardised daily grain storage
tariffs
which were recommended to
SAFEX.
3.2. It agrees that its conduct as
described above may have bean in contravention of section 4(1
)(b)(i) of the
Ad.
4.
Administrative
Penalty
4.1.
Having
regard to the provisions of sections 58(1)(a)(iii) as read with
sections 59(1 Xa). 59(2) and 59(3) of the
Act,
Suidwes
accepts
that a contravention of section 4(1)(b)(i) may lead 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
Suidwes
will pay an
administrative penalty in the amount of R 4 644 617.65.
4.3.
This amount does not exceed 10% (ten percent) of the total grain
silo storage turnover of
Suidwes
for the 2009
financial year.
4.4.
Suidwes
will pay
the amount set out in paragraph 4.2 above to the
Commission
in three
consecutive payments as follows:
4.4.1. R1 000 000 within 30 days of
confirmation of this
Consent
Agreement
by the
Tribunal;
4.4.2.
R1 000 000 on or
before 31 December 2011; and
4.4.3. R
2 644 617.65 on or before 30 June 2012.
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.
Suidwes
agrees to fully
cooperate with the
Commission
in relation to the
prosecution of the complaint referral. Without limiting the
generality of the foregoing,
Suidwes
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
if.
is &j'.'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.
Suidwes
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)ofthe4cf.
5.3.
Suidwes
shalf
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
Act,
In particular,
Suidwes
shall:
5.3.1. draft and implement's competition policy and
compliance programme;
5.3.2. provide training on
competition law compliance on issues particularly relevant to
Suidwes
and
its employees and officials;
5.3.3. provide training on
competition law compliance to all persons and/or officials employed
by
Suidwes
after
the confirmation of this
Consent
Agreement
by the
Tribunal;
5.3.4. update the competition policy
and training annually to ensure
Suidwes's
continued
compliance with the
Act.
5.4.
Suidwes
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 ail proceedings
between the
Commission
and
Suidwes
relating
to any alleged contravention by the
Respondents
of the
Act
that
is the subject of the
Commission's
investigation
under case no
2009MAR4349.
For Suidwes
Dated
and signed Leeudoringstad on the 25
th
day of
July 2011
Managing
Director
For
the Commission
Dated
and signed Pretoria on the 29
th
day of
July 2011
Competition
Commissioner