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[2011] ZACT 67
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Competition Commission v Sentraal-Suid Co-operative Ltd, In re Competition Commission v Afgri Operations Ltd and Others (43/CR/Jun11) [2011] ZACT 67; [2011] 2 CPLR 292 (CT) (7 September 2011)
COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No: 43/CR/Jun11
In
the matter between:
The
Competition Commission
…..............................................................................
Applicant
and
Sentraal-Suid
Co-operative Limited
…..................................................................
Respondent
Panel
:
N
Manoim (Presiding Member), Y Carrim (Tribunal
Member),
and A Wessels (Tribunal Member)
Heard
on :
07
September 2011
Decided
on :
07
September 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
GT
Case No.
CC
Case No. 2009Mar4349
In
the matter between:-
THE
COMPETITION COMMISSION
and
SENTRAAL-SUID
CO-OPERATIVE LIMITED 9
th
Respondent
in
re:
THE:
COMPETITION COMMISSION
And
AFGRI
OPERATIONS LIMITED 1
st
Respondent
SENWES
LIMITED 2
pd
Respondent
NWK
LIMITED 3
rd
Respondent
OVK
OPERATIONS LIMITED 4
th
Respondent
SUIDWES
AGRICULTURE (PTY) LIMITED 5
th
Respondent
VRYSTAAT
KOOPERASIE BEPERK 6th Respondent
OVERBERG
AGRI BEDRYWE (PTY) LIMITED
7
th
Respondent
DIE
HUMAN SDORPSE KOOPERASIE BEPERK 8
th
Respondent
SENTRAAL
SUID C00-OPERATIVE LIMITED 9
th
Respondent
GWK
LIMITED 10
th
Respondent
KAAP
AGRI BEDRYF LIMITED 11
th
Respondent
MGR
BEDRYFSMAATSKAPPY (PTY) LIMITED 12
th
Respondent
TUINROETE
AGRI BEPERK 13th Respondent
MOORREESBURGSE
KORlNGBOERE (PTY) LIMITED 14
th
Respondent
TWKLANDBOU
BEPERK 15
th
Respondent
NTK
LIMPOPO AGRIC BEPERK 16
th
Respondent
GRAIN
SILO INDUSTRY (PTY) LTD 17
th
Respondent
CONSENT
AGREEMENT IN TERMS OF SECTION 49D READ WITH SECTION 5&f1)(a)(iff)
add 58(1)(i» OF THE COMPETITION ACT, 1993 (ACT
NO, 89 OF 1998),
AS AMENDED, BETWEEN THE COMPETITION COMMISSION ("THE
COMMISSION") AND SENTRAAL-SUID CO-OPERATIVE LIMITED
("SSKV),
IN RESPECT OF AN ALLEGED CONTRAVENTION OF SECTION 4(1)(b)(i) OF THE
COMPETITION ACT, 1998 ("THE ACT").
The
Commission
and
SSK
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 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
sl
Floor, Muiayo Building (Block C),
the dti Campus, 7? Meintjies Street, Sunnyside, 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 Acf, 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 weii
as an expanded initiation
on 25 May 2010 after the decision was made to include aii the members
and shareholders of the Grain Siio
industry;
1.5.
"Consent Agreement"
means
this agreement duly signed and concluded between the Commission and
SSK;
1.6.
"Grain Silo Industry"
means
Grain Siio industry (Pty) Ltd, 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,
Aikantrantstraat, Lynwood Manor, Pretoria, Gauteng Province.
The GSl
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 "SAFHX").
1.7.
"SSK"
means
Senfraai-Suid Co-operative Limited, an agricultural cooperative
with limited liability registered in accordance with
the laws of the
Republic of South-Africa with registration number K6/3/3/115 and with
its registered office and main place of business
at Voortrekstraat
34, Swellendam, Wes Kaap, Suid Afrlka, 6740,
1.8.
"Parties"means the Commission and SSK;
1.9.
"Respondent"
means
for purposes of this agreement SSK;
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.
"Tribune?
1
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
rt
Fioor, Mulayo building (Block C),
the dti Campus, 77 Merntjies Street Sunnyslde, 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 ("NvVK"),
OVK Operations Limited ("OVK"), Suidwes (Pty) Limited
("Suidwes"), Vrystaatse KoOperasie
Limited ("VKB")
and the Grain Siio industry ("GS1") for alleged
contravention of section 4(1)(b)(i) of the
Act.
2.2.
The investigation revealed that the storage rate fs agreed to and
assented to not only by the entities against whom the original
complaints initiation was made, but by aif members and shareholders
of
GSl.
in
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 conceded that:
2.3.1.
the
respondents
and GSl 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(1)(b)(l) 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 alt shareholders
or members of the
GSl.
Although the
GSl
ss a private company,
it amounts to an industry association for members of the grain
storage industry.
SAF&X
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 annua! 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 its members were contravening section 4(1)(b)(i) of the Act.
2.4.2.
if was the
GSI's
technical committee
that was responsible for fixing the daiiy storage tariff on behalf ■
of. the
GS!
and
its members, In response to requests from
SAFEX
t
the
GS!
consulted its
shareholders, The shareholders submitted individual proposals as to
the appropriate storage rate to
GSf.
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
SAFKXon
behaif
of GSl 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 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 daiiy 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 coitusion.
2.5.
.
The
Commission
took a decision to
refer to the
Tribunal
its complaint that is
described above.
3.
Statement of conduct by SSK
3.1.
SSK admits that, as a member of
the GSI, it was asked on two occasions for input regarding the
standardised daiiy wheat storage
tariff which were to be recommended
to SAFBX, namely:
3.1.1.
via e-mail during February 2003;
3.1.2.
via e-mail in June 2007 when it was requested to indicate if its
systems could accommodate % cent tariffs.
3.2.
SSK
therefore
participated, to the aforesaid limited extent, in agreeing on the
standardised daily wheat storage tariffs which were
recommended to
SAFEX. As it had {and still has) no other option in the
market
circumstances, it also used the SAFEX daily wheat storage
tariffs in respect of transactions in the physical market
3.3.
Although
SSK
acted
bona fides,
it
accepts that its aforesaid conduct may be perceived as constituting a
contravention of section 4(1){b)(i) of the Act.
4.
Administrative Penalty
4.1.
Having regard to the provisions of sections 58(1)(a)(iil) as read
with sections 59(1 ){a), 59(2) and 59(3) of the Act,
SSK
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.
SSK
will therefore pay
an administrative penalty in the amount of R75 852.04.
4.3.
This amount constitutes 4% (four per cent) of the tote! wheat daily
storage tariff silo turnover for the 2009 financial year;
4.4.
SSK
will pay the
amount set out in paragraph 4.2 above to the
Commission
upon the date 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.
SSK agrees to fully cooperate
with the
Commission
in
relation to the prosecution of the complaint referral. Without
limiting the generality of the foregoing, SSK specifically agrees
to:
5.1.1.
Testify in the complaint referral (if any) in respect of alleged
contraventions covered by this
Consent
Agreement;
and
5.12.
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.
SSK
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.
SSK
shall 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,
SSK
shall:
5.3.1
draft and implement a competition
policy and compliance programme;
5.3.2.
provide training on competition law compliance on issues particularly
relevant to
SSK
and
its employees and officials;
5.3.3.
provide training on competition law compliance to all persons andfor
officials employed by
SSK
in managerial and
marketing capacities after the confirmation of this
Consent
Agreement
by the
Tribunal;
5.3.4.
update the competition policy and training annually to ensure
SSK's
continued compliance
with the Act.
5.4.
SSK
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
SSK
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 at Swellendam on the 22
nd
day of
June 2011
For SSK
Chief
Executive Officer
Dated
and signed at Pretoria on the 23
rd
day
of June 2011
For
the Commission's
Competition
Commissioner