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[2011] ZACT 61
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Competition Commission v Southern African Bitumen Association, In re: Chevron SA (Pty) Ltd and Others (06/CR/MAR10) [2011] ZACT 61; [2011] 2 CPLR 360 (CT) (17 August 2011)
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case
No.:06/CR/MAR10
In the matter between:
The
Competition Commission
…...........................................................................
Applicant
and
Southern
African Bitumen Association
…........................................................
Respondent
In
re:
Chevron
SA (Pty) Ltd
….................................................................................
First
Respondent
Engen
Limited
….......................................................................................
Second
Respondent
Shell
SA (Pty) Ltd
…......................................................................................
Third
Respondent
Total
SA (Pty) Ltd
…....................................................................................
Fourth
Respondent
Masana
Petroleum Solutions (Pty) Ltd
….......................................................
Fifth
Respondent
Southern
African Bitumen Association
…......................................................
Sixth
Respondent
SASOL
Limited
….....................................................................................
Seventh
Respondent
Tosas
(Pty) Ltd
…........................................................................................
Eighth
Respondent
Panel:
N Manoim (Presiding Member), A Wessels (Tribunal Member) and Y Carrim
(Tribunal Member)
Heard
on : 16 August 2011
Decided
on : 17 August 2011
ORDER
The Tribunal hereby confirms as
an order the agreement between the Competition Commission and the
respondent (the 'parties'), annexed
hereto marked "A",
subject to the deletion, as agreed by the parties, of the portion in
paragraph 4.1 of the consent
agreement, which reads as follows:
"SABITA abides the
decision of the Tribunal as to whether the conduct alleged in the
complaint referral in fact constitutes
a contravention of section
4(1)(b)(i)."
Presiding Member
N
Manoim
Concurring:
Y
Carrim and A Wessels
IN THE COMPETITION TRIBUNAL OF
SOUTH AFRICA HELD IN PRETORIA
CT
Case No.06/CR/Mar10
CC
Case No.2009Jan4223
In
the matter between:
COMPETITION
COMMISSION
…..............................................................................
Applicant
and
and
Southern
African Bitumen Association
…........................................................
Respondent
In
re:
Chevron
SA (Pty) Ltd
….................................................................................
First
Respondent
Engen
Limited
….......................................................................................
Second
Respondent
Shell
SA (Pty) Ltd
…......................................................................................
Third
Respondent
Total
SA (Pty) Ltd
…....................................................................................
Fourth
Respondent
Masana
Petroleum Solutions (Pty) Ltd
….......................................................
Fifth
Respondent
Southern
African Bitumen Association
…......................................................
Sixth
Respondent
SASOL
Limited
….....................................................................................
Seventh
Respondent
Tosas
(Pty) Ltd
…........................................................................................
Eighth
Respondent
SETTLEMENT
AGREEMENT
BETWEEN
THE COMPETITION COMMISSION AND SOUTHERN AFRICAN BITUMEN ASSOCIATION
IN RESPECT OF AN ALLEGED CONTRAVENTION OF SECTION
4(1)(b)(i) OF THE
COMPETITION ACT, 1998 (ACT NO. 89 OF 1998), AS AMENDED
The
Commission
and
SABITA
hereby agree
that
application be made to the Competition Tribunal for the confirmation
of this Settlement Agreement as an order of the Competition
Tribunal
in
terns
of
section 58 (1)(a)(iii) 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
Settlement
Agreement
the
following definitions shall apply:
1.1.
"
Act”
means the
Competition Act, 1998 (Act No. 89 of 1998), as amended;
1.2.
"
Bitumen
"
means
a residual fraction of crude oil, a mixture of organic components
that are highly viscous, black and
sticky.
1.3.
"
Chevron
"
means
CHEVRON SA (PTY) LTD a company duly incorporated with
limited
liability
in terms of the company laws of the Republic of South Africa, with
its principal place of business at 19 DF Maian Street
Cape Town
1.4.
"
Commission
"
means
the Competition Commission of South Africa, a statutory
bo&/
established
in terms of section 19 of the Act, with its principal place of
business at 1
si
Floor,
Mulayo Building (Block C), the dti Campus, 77 Meintjies Street,
Sunnyside, Pretoria, Gauteng;
1.5.
"
Commissioner
"
means
the Commissioner of the Competition Commission, appointed in terms
of section 22 of the Act;
1.6.
"
Complaint
'
means
the
comp\a\n\
initiated
by the Commissioner of the Competition Commission in terms of
section 49B of the Act under case number 2009Jan4223
1.7.
"
Settlement
”
Agreement
means
this
agreement duly signed and concluded between the Commission and
SABITA;
1.8.
"
CLP
"
means
the Corporate Leniency Policy prepared and issued by the Commission
as a guideline, to clarify the Commission's policy approach
on
matters falling within its jurisdiction in terms of the Act;
1.9
"Engen"
means
ENGEN LIMITED ("Engen"), a company duly incorporated and
registered in terms of the company laws of the Republic
of South
Africa with its principal place of business at Engen Court, Thibauit
Square,
corner
of
Riebeeck and Long Streets, Cape Town.
1.10.
"Masana"
means
Masana
Petroleum Solutions (Pty) Limited, a company duly incorporated and
registered in
terms
of
the company laws of the Republic of South Africa with its principal
place of business at 10 Junction Avenue, Parktown, Johannesburg.
1.11.
"Parties"
means
the Commission and SABITA;
1.12.
"SABITA"
means
SOUTHERN AFRICAN BITUMEN ASSOCIATION ("SABITA") a
voluntary non-profit association with its principal place of
business at 5 Lonsdale, Lonsdale Way, Pinelands, Cape Town.
1.13.
"S
asol
"
means
SASOL LIMITED ("Sasoi"), a company duly incorporated and
registered in terms of the company laws of the Republic
of South
Africa, with its principal place of business at 1 Sturdee Avenue,
Rosebank, Johannesburg
1.14.
"
Shell
"
means
SHELL SA (PTY) LTD ("Shell") a
company
duly
incorporated and registered in terms of the company laws of the
Republic of South Africa, with its principal place of business
at
Shell House, 9 Riebeeck Street cape Town.
1.15.
"
Tosas
"
means
TOSAS (PTY) LTD ('Tosas"), a company duly incorporated and
registered in terms of the company laws of the Republic
of South
Africa, with its principal place of business at 12 Commercial Road,
Wadeville, Johannesburg. The eighth respondent is
a wholly owned
subsidiary of the seventh respondent Prior to April 2005, the
eignih
respondent
was a joint venture between Saso! And Total in terms of which Sasoi
owned 70% of the issued share
capital
and
Total owned 30%.
1.16.
"
Total
"
means
TOTAL SA (PTY) LTD ("Total"), a company duly incorporated
and registered in terms of the company laws of the Republic
of South
Africa, with its principal place of business at Total House, 3
Biermann Avenue, Rosebank, Johannesburg.
1.17
"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 10
September 2008,
Sasol
together
with its subsidiaries, including Tosas, applied for and subsequently
obtained conditional immunity in terms of paragraph
12 of the
applicant's
CLP,
in
respect of their participation in the
development of, and
agreement to adopt a
pricing
mechanism
in
respect of the sale of base bitumen and bituminous products.
2.2.
In its
application for leniency
Sasol
alleged
that it, together with
Chevron,
Engen, Shell, Total, Masana
and
Tosas
being
parties in a horizontal relationship, had contravened section
4(1)(b)(i) of the Act by engaging in price fixing by
agreeing
to
a mechanism to calculate the WLSP (Wholesale List Selling Price),
and to the development and implementation of the BPAF (Bitumen
Price
Adjustment Factor) in relation to the sale of base bitumen and
bituminous products.
2.3. On 12
January
2009,
and pursuant to
Sasol's
leniency
application, the applicant initiated a complaint in terms of section
49(B) (1) of the Act against the respondents. The
applicant
conducted an investigation into the relevant facts disclosed by
Sasol
and
concluded
that
Chevron,
Engen, Shell, Total, Masana, Sasol
and
Tosas
had
indeed engaged in restrictive horizontal practices, in contravention
of section 4(1 )(b)(i) of the Act.
2.4. The Commission's
investigation revealed that:
2.4.1 In and
during the period commencing from September 2000 to December 2009,
and possibly thereafter,
Chevron,
Engen, Shell, Total, Masana, Sasol
and
Tosas,
being
parties
in
a horizontal relationship, acting through their representatives,
entered into various agreements, and engaged in conduct that
involved concerted practices and/or took decisions that were
intended to directly and indirectly fix the purchase or
selling
price
of bitumen and bituminous products in the Rep ublic in contravention
of section 4(1)(b)(i) of the Act.
2.4.2.
Chevron,
Engen, Shell, Total, Sasol
and
Tosas
are
producers and / or suppliers of bitumen, and compete with one
another in the production and / or sale of bitumen and bituminous
products in the Republic. Chevron, Engen, Shell, Total, and Sasol
are also members of
SABITA,
a
non profit organisation that represents
inter
alia
producers
of and applicators of bituminous products.
2.4.3. The
respondents, operating through
SABITA,
as
well as through other forms of communications, including bilateral
communications between them, agreedto a proposed contractual
formula
for
determining the fluctuations in the cost of base bitumen..
2.4.4.
Historically, the
petroleum
and
energy companies calculated the prices for bitumen with reference to
an industry-wide retail price list for bitumen and bituminous
products. This was
calculated
collectively
by all petroleum
companies
and
was referred to as the Wholesale List Selling Price ("WLSP").
The WLSP
for bitumen was made up of the In Bond
Landed
Costs
("IBLC"), which essentially was an
Import
parity
based
formula
where
various transport related costs were added to a Free on Board
("FOB") heavy fuel oil price at typical international
refining centres. This base price was replaced
finally
by
the
Durban
Bunker
price. Added to the IBLC to arrive at the WLSP were the SABITA
levy, the margin and the Road Equalisation Factor
("REF"),
which was subsequently replaced by the Crude Oil Pipeline tariff.
2.4.6
Chevtvn,
Engen, Shell, Total, Masana, Sasol
and
Tosas
and
other role players in the industry, in contravention of section 4 of
the Act, discussed the establishment of a mechanism to
set the WLSP
of bitumen in relation to the Bitumen Pricing Index. The respondents
adopted the BPAF as a basis for price escalations
in their contracts
with end consumers.
3. The Complaint Referral
3.1. The
Commission
referred
the above complaint to the
Tribunal
on
4 March 2010.
3.2. Prior
to the referral,
SABITA,
approached
the
Commission
and
indicated its willingness to settle the matter.
4. Statement of Conduct
4.1.
SABITA
admits
that
the
discussions referred to above, alleged to be in contravention of
section 4(1)(b)(i)
occurred
through
its
function as a trade association, which gave rise to the BPAF and to
facilitating the publication and updating of the BPAF.
SABITA
abides
the decision of the Tribunal as to
whether
the
conduct alleged in the complaint referral in fact constitutes a
contravention of section 4(1 )(b)(i).
4.2. SABITA
confirms
that
it
ceased engaging in the conduct detailed in paragraph 4.1 above in
July 2007 and that, to the best of its knowledge and belief,
there
have been no further contraventions of section 4 of the Act, which
were and /or might have been engaged in or facilitated
by SABITA.
5. Agreement concerning future
conduct
5.1.
SABITA
agrees
to:
5.1.1.
Desist from any conduct
which
would
allow ft to be used as a platform for collusion enabling its members
to engage in carte! conduct.
5.1.2. Refrain from updating or
publishing the
5.1.3. 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:
5.1.3.1. A competition policy
to be drafted and implemented by SABITA;
5.1.3.2. provide specific
training on competition law aspects particularly relevant to SABITA,
to its 14 council members and 4
SABITA officers;
5.1.3.3.
ensure that such training will be made available to all new
employees joining SABITA. Furthermore, SABITA will
upd&\e
such
training annually to ensure on an on going basis that it wilf not be
used as a platform where its members can engage in any
anticompetitive activities
5.1.4. To
submit a copy of such compliance programme to the Commission within
60 days of the date of confirmation of the
Settlement
Agreement
as
an order by the Competition Tribunal;
5.1.5. To circulate a statement
summarising the contents of this Settlement Agreement to all
management and operational staff
employed at SABITA within 30 days
from the date of confirmation of this Settlement Agreement by the
Tribunal;
6. Administrative Penalty
6.1. 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,
SABITA
accepts
that it is liable to pay an administrative penalty.
The parties have agreed that
SABITA will pay an administrative penalty in the amount of R500 000
(Five hundred thousand rand);
6.2. This amount does not
exceed 10% of SABITA's total annual income derived from membership
fees and sponsorships.
6.3.
SABITA
will
pay the amount set out in paragraph
Q.I
above
to the Commission as follows:
6.3.1. R100 000 within 10 days
of confirmation of this Settlement Agreement by the Tribunal;
6.3.2. R 200 000 on or before
31 December 2011;
6.3.3. R 200 000 on or before
30 June 2012.
6.4.
The penalty
must be paid into the Commission's bank account which is as follows:
NAME: THE COMPETITION
COMMISSION FEE ACCOUNT BANK: ABSA BANK, PRETORIA ACCOUNT NUMBER:
4050778576 BRANCH CODE: 323 345
6.5.
The penalty
will be paid over by the Commission to the National Revenue Fund
in
accordance with the provisions of section 59(4) of the Act.
7. 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
SABITA
relating
to any alleged contravention by the respondents of the Act that is
the subject of the Commission's investigation referred
to the
Tribunal under CT Case No. 06/CR/Mar10
Dated and
signed Cape Town on the 14
th
day of July
2011
For
SABITA
Chief
Executive Officer
Dated
and signed Pretoria on the 18
th
day of July
2011
For
the Commission
Competition
Commissioner