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[2011] ZACT 60
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Competition Commission South Africa v MGK Bedryfsmaatskappy (Pty) Ltd (43/CR/Jun11) [2011] ZACT 60; [2011] 2 CPLR 264 (CT) (16 August 2011)
COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No:43/CR/Jun11
In
the matter between:
The
Competition Commission
…...........................................................................
Applicant
and
MGK
Bedryfsmaatskappy (Pty) Ltd
…................................................................
Respondent
Panel
: N Manoim (Presiding Member), Y Carrim (Tribunal Member), and A
Wessels (Tribunal Member)
Heard
on : 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. 2009Mar4349
!n
the matter between:
THE
COMPETITION COMMISSION
…..................................................................................Applicant
and
MGK
BEDRYFSMAATSKAPPY (PTY) LIMITED
….................................................
12
lh
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
lh
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
SECTIOH
4SD
READ WITH SECTION 58(1)(a) (ii) and 58(1)(b) OF THE COMPETITION ACT,
1998 (ACT NO. 89 OF 1998), AS AMENDED, BETWEEN THE COMPETITION
COMMISSION ("THE COMMISSION") AND MGK BEDRYFSMAATSKAPPY
(PTY) LIMITED ("MGK"), IN RESPECT OF AN ALLEGED
CONTRAVENTION OF SECTION 4(1)(b)(i) OF THE COMPETITION ACT, 1998
("THE ACT').
The
Commission
and
MGK
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
pface of business at 1
sl
Floor,
Mulayo Building (Block C), the dti Campus, 77 Meintjies Street,
Sunnyslde, Pretoria, Gauteng;
1.3.
"Commissioner"
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
Ad,
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.
"Consent
Agreement"
means
this agreement duly signed and concluded between the Commission and
MGK;
1.6.
"Grain
Sito industry (Pty) Ltd"
is
a private company duly incorporated in accordance with the company
laws of (he 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.
"MGK"
means
MGK Bedryfsmaatskappy (Ply) Limited, a company registered and
incorporated in accordance with the taws of the Republic of
South-Africa with registration number 1998/001875/07 and with its
registered office, in the alternative its main place of business,
at
1st Floor Piaza Building, 45 Van Vetden Street, Brits 0250;
1.8.
"Parties"
means
the Commission and MGK;
1.9.
"Respondent"
means
for purposes of this agreement MGK;
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,
Muiayo building (Block G), 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 KoSperasie
Limited
("VKB") and the Grain Siio 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 al! members and shareholders
of
GSI.
!n
the circumstances, on 25 May 2010 the
Commissioner
expanded
the investigation to refer to ail 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
GSl
have
contravened section 4{l)(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
ail former cooperatives who own grain storage siios 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
GSL
Although
the
GSf
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
GSl
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
GSl
on
an annual basis. In 2008, as is set out below, the
GSl
declined
to provide the standardised storage tariff to
SAFEX
any
longer on account of the
Commission's
contentions
that it and Us 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
GSl
and
its members, in response to requests from
SAFEX,
the
GSl
consulted
its shareholders. The shareholders submitted individual proposals as
to the appropriate storage rate to
GSl,
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 GSl and its shareholders.
2.4.3.
The essence of the conduct complained of is that the daily storage
tariff proposed by
GSl
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
Tribunal
its
complaint that is described above.
3.
Statement of conduct by MGK
MGK
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 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, MGK 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.
The parties have agreed that
MGK
will
pay an administrative penalty in the amount of R 226 800.
4.3.
This amount constitutes 4% (four per cent) of the total grain sifo
storage turnover for the 2009 financial year;
4.4.
MGK
will
pay the amount set out in paragraph 4,2 above to the
Commission
within
10 (ten) days 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.
MGK
agrees
to fully cooperate with the
Commission
in
relation to the prosecution of the complaint referral. Without
limiting the generality of the foregoing,
MGK
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.
MGK
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.
5.3.
MGK
shall
continue with developing , implementing and monitoring its
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,
MGK
shall:
5.3.1.
continue to implement a competition policy and compliance programme;
5.3.2.
continue to provide training on competition law compliance on issues
particularly relevant to
MGK
and
its employees and officials;
5.3.3.
update
the competition policy and training annually after confirmation of
this Consent Order and continue to do so on an annual
basis to
ensure
MGK's
continued
compliance with the Act.
5.4.
MGK
shall
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
MGK
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 Brits on the 30
th
day
of May 2011
For
MGK
Chief
Executive Officer
For
the Commission
Competition
Commissioner
Dated
and signed Pretoria on the 3rd day of June 2011