About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2011
>>
[2011] ZACT 69
|
|
Competition Commission v Moorreeburgse Koringboere (Pty) Ltd, In re: Competition Commission v Afgri Operations Ltd and Others (43/CR/Jun11) [2011] ZACT 69; [2011] 2 CPLR 269 (CT) (7 September 2011)
COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No: 43/CR/Jun11
In
the matter between:
The
Competition Commission
…........................................................................................
Applicant
and
Moorreeburgse
Koringboere (Pty) Ltd
…......................................................................
Respondent
Pane! :
N Manoim (Presiding Member), Y Carrim (Tribunal Member), and A
Wessels (Tribunal Member)
Heard on
07 September 2011
Decided
on : 07 September 2011
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
MOORREESBURGSE
KORINGBOERE (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 l3th 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(1)(a)(iii) and 58(1)(b) OF THE COMPETITION ACT,
1998 (ACT NO. 89 OF 1998), AS AMENDED, BETWEEN
THE COMPETITION
COMMISSION ("THE COMMISSION'') AND MOORREESBURGSE KORINOBOERE
(PTY) LIMITED ("MKB"), IN RESPECT
OF AN ALLEGED
CONTRAVENTION OF SECTION 4(1)(b)(i) OF THE COMPETITION ACT, 1998
("THE ACT").
The
Commission
and
MKB
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
fallowing 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,. Mulayo Building (Block C), the dti Campus, 77
Meintjies Street, SunriVside, 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 ease number 2009Mar4349 initiated by
the,
Commissioner in terms of section 49B of the
Ac!,, including
a
complaint concerned with
allegations of price fixing in terms of section 4(i)[b).(i) of the
Act initiated on 17 March 2009 as well
as an, expanded, initiation oh
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
MKB;
1.6.
"Grain Silo 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, Aikantrahfsfraat-
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.
MKB"
means
Moorreesburgse Koringboere (Pty) Limited, a company' registered and
incorporated in accordance with the laws of the Republic
of
South-Africa with registration number 1999/007729/07 and with its
registered office and main place of business at corner of
Main and
Long. Street, Moorreesburg, 7310;
1.8.
"Parties"
means the Commission and MKB;-
1.9.
"Respondent"
means
for purposes of this agreement MKB;
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;
Mulayo^ building (Block C), the dti Campus,, 77 Meintjies Street*
Sunnysidei Pretoria, Gauteng.
2. The
Complaint and Complaint investigation
2.1.
On 17 March 2009 the
Commissioner
initiated
a complaint against Afgri
Operations
-
Limited fAfgri"), Senwes Limited ("Senwes"),
Noordwes
Kooperasie Limited ("NWK"),
OVK Operations Limited ("OVK) SuidWes (Pty) Limited
("Suidwes"),. Vrystaatse
Kbepefasie 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 hot only by the entities against whom the original
complaints
i
nitiation was made, but by
all members and shareholders of
GSI.
In
the circumstances, oh 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 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: silos and provide
other agricultural services, arid 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
pro
viding
storage,: Until 2008
SAFEX
requested
the standardised tariff from the
GSI
on
an annual basis, in 2G0fis, as is set out below, the
GSI
declined
to provide the standardised storage tariff to
SAFEX
any
longer oh 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
GSI.
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 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 service's, 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 SVIKB
3.1.
MKB.
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-mail 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.
MKB
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
MKB
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.
Raving 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;
MKB
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.
MKB
will
therefore pay an administrative penalty in the amount of R159 364.60.
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.
MKB 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 info the
Commission's
bank account, details of which are as
follows;
Ban&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 irt
accordance,with section 59(4) of the Act.
5.
Agreement Concerning Future Conduct
5.1.
MKB
agrees to fully cooperate
with the
Commission
in
relation to the prosecution Of the complaint referral Without
limiting the generality of the foregoing,
MKB.
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.
MKB
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.
MKB
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,
MKB,
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
MKB and
its
employees arid officials;
5.3.3.
provide training on competition law compliance to all persons and/or
officials employed by
MKB
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
MKB's
continued compliance with the Act. .
5.4.
MKB
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 all proceedings between the
Commission
and
MKB
relating
to any alleged contravention by the
Respondents
of the Act that is the subject of the
Commission's
investigation
under case ho 2009Mar4349.
Dated
and signed at Moorreesburg on the 22
nd
day of June 2011
From MKB
Chief
Executive Officer
Dated
and signed at Pretoria on the 23
rd
day of June 2011
For
the Commission's
Competition
Commissioner