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[2011] ZACT 68
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Competition Commission v Overberg Agri Bedrywe (Pty) Ltd, In re: Competition Commission v Afgri Operations Ltd and Others (43/CR/Jun11) [2011] ZACT 68; [2011] 2 CPLR 280 (CT) (7 September 2011)
COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No: 43/CR/Jun11
In
the matter between:
The
Competition Commission
…..............................................................................
Applicant
and
Overberg
Agri Bedrywe (Pty) Ltd
….....................................................................
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
CT Case No.
CC Case No.
2009Mar4349
In
the matter between:-
THE
COMPETITION COMMISSION
and
OVERBERG AGRI BEDRYWE
(PTY) LIMITED
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 58(l){a)()H) and 58(1)(b) OF
THE COMPETITION ACT, 1998 (ACT NO. 89 OF
1998), AS AMENDED, BETWEEN
THE COMPETITION COMMISSION ("THE COMMISSION") AND OVERBERG
AGRI BEDRYWE (PTY) LIMITED ("OVERBERG"),
IN RESPECT OF AN
ALLEGED CONTRAVENTION OF SECTION 4(1)(b)(i) OF THE COMPETITION ACT,
1998 ('THE ACT").
The
Commission
and
Overberg
hereby agree
that application be made to the
Tribtmaifor
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
s
*
Floor, Mulayo Building (Block C), the dti Campus, 77 Meintjies
Street, Sunnyside, Pretoria, Gauteng;
1.3.
"Commissioned
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
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 all the members and
shareholders of
the Grain Silo industry;
1.5.
"Consent Agreement"
means
this agreement duly signed and concluded between the Commission and
Overberg;
1.6.
"Grain Sito Industry"
means Grain Silo 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 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.
"Overberg"
means
Overberg Agri Bedrywe (Pty) Limited, a company registered and
incorporated in accordance with the laws of the Republic of
South-Africa with registration number 1997/021082/07 and with its
registered office and main ptace of business at 11 Donkinstreet,
Caledon, 7230.
1.8.
"Parties"
means
the Commission and Overberg;
1.9.
"Respondent"
means
for purposes of this agreement Overberg;
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 28 of the Act, with its principal
place of business at 3
rd
Floor,
Mufayo building (Block C), the dti Campus, 77 Meintjtes 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 Kooperasie
Limited
("VKB") and the Grain Silo 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 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)(b)(i) of the
Act in that they fix the prices of the daiiy 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 sifos 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 below, 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.
2.4.3. it
was the GS/'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
GSt
consulted
its shareholders. The shareholders submitted individual proposals as
to the appropriate storage rate to
GSI.
These
rates were collated and evaluated by the GS/'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 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 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 Overberg
3.1.
Overberg
admits that, as a
member of the GSI, it was asked on three occasions for input
regarding the standardised daily wheat storage tariff
which were to
be recommended to SAFEX, namely:
3.1.1
.
via e-maii during February 2003;
3.1.2. when, as a member
of GSI, it attended a GSI Technical Committee meeting on 10 May 2007
at which the standardised daily wheat
storage tariff which were to be
recommended to SAFEX was discussed;'
3.1.3. via e-mail in June
2007 when it was requested to indicate if its systems could
accommodate % cent tariffs.
3.2
.
Overberg 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 Overberg 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)(iii) as read with
sections 59(1)(a), 59(2) and 59(3) of the Act,
Overberg
accepts that a contravention of section 4(1
)(bK0 may lead to the imposition of an administrative penalty where
the
Tribunal
deems it
appropriate.
4.2.
Overberg
will
therefore pay an administrative penalty in the amount of R241 186.20.
4.3. This amount
constitutes 4% (four per cent) of the total wheat daily storage
tariff silo turnover for the 2009 financial year;
4.4.
Overberg
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.
Overberg
agrees to fufiy
cooperate with the
Commission
in
refation to the prosecution of the complaint referral. Without
limiting the generality of the foregoing,
Overberg
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.
Overberg
agrees
that it will in future refrain from the provision of contractual
undertakings that have the potential to constitute contraventions
of
section 4(?)(b) of the Act.
5.3.
Overberg
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,
Overberg.
5.3.1. shall draft and
implement a competition policy and compliance programme;
5.3.2. has
already provided training on competition faw compliance on issues
particularly relevant to
Overberg
and
its employees and officials;
5.3.3..
shall provide training on competition law compliance to all persons
and/or officials employed by
Overberg m
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
Overberg's
continued
compliance with the Act.
5.4.
Overberg
shall submit
a copy of such compliance programme to the Commission within 50 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
Overberg
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 Caledon on the 22
nd
day of
June 2011
From
Overberg
Chief
Executive Officer
Dated
and signed at Pretoria on the 23
rd
day
of June 2011
For
the Commission's
Competition
Commissioner