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[2011] ZACT 90
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Competition Commission v Senwes Ltd (43/CR/Jun11) [2011] ZACT 90; [2012] 1 CPLR 109 (CT) (9 November 2011)
REPUBLIC
OF SOUTH AFRICA
Case
No:43/CR/Jun11
In
the matter between:
The
Competition Commission
…........................................................
Applicant
and
Senwes
Ltd
…...............................................................................
Respondent
Panel
A
Wessels (Presiding Member), M Mokuena (Tribunal Member), and A Ndoni
(Tribunal Member)
Heard
on
09
November 2011
Decided
on
09
November 2011
Order
The
Tribunal hereby confirms the order as agreed to and proposed by the
Competition Commission and the respondent, annexed hereto
marked "A".
Pressing
Member
A
Wessels
Concurring:
M
Mokuena and A Ndoni
IN
THE COMPETITION TRIBUNAL OF SOUTH AFRICA
HELD
IN PRETORIA
CT
Case No.
Case
No. 2009Mar4349
In
the matter between:
THE
COMPETITION COMMISSION
Applicant
and
SENWES
LIMITED 2
nd
Respondent
In
re:
COMPETITION
COMMISSION
THE
COMPETITION COMMISSION
and
AFGRI
OPERATIONS LIMITED 1
st
Respondent
SENWES
LIMITED 2
nd
Respondent
NWK
LIMITED 3
rd
Respondent
OVK
OPERATIONS LIMITED 4
th
Respondent
SUIDWES
AGRICULTURE (PTY) LIMITED 5
th
Respondent
VRYSTAAT
KOOPERASIE BEPERK 6
th
Respondent
O
VERB ERG 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
MOORREESBURGSE
KORINGBOERE (EDMS) BEPERK 14
th
Respondent
TWK
LANDBOU BEPERK 15
th
Respondent
NTK
LIMPOPO AGRIC BEPERK 16
th
Respondent
GRAIN
SILO INDUSTRY (PTY) LIMITED 17
th
Respondent
CONSENT
AGREEMENT IN TERMS OF SECTION 49D READ WITH SECTION 58(1MaKH0 and
58(1 )(b) OF THE COMPETITION ACT, 1998 (ACT NO- 89 OF
1998), AS
AMENDED BETWEEN THE COMPETITION COMMISSION ("THE COMMISSION")
AND SENWES LIMITED ("SENWES"), IN RESPECT
OF AN ALLEGED
CONTRAVENTION OF SECTION 4(1)(b)(>) OF THE COMPETITION ACT, 1998
("THE ACT")-
The
Commission
and
Senwes
hereby
agree that application be made to the
Tribunal
for
the confirmation of this
Consent
Agreement
in
terms of section 58 (1)(a)(KI) as read wrth section 58(1 Kb) 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
11
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
st
Floor,
Mulayo Building (Block C), the dti Campus, 77 Meintjies Street.
Sunnyside, Pretoria, Gauteng;
1.3.
"Commissioner"
means
the Commissioner of the Commission, appointed in tetrns 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,
Inter
alia,
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 Agreem&nf*
means
this agreement duly signed and concluded between the Commission and
Senwes;
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,
Alkantrantstraat, Lynwood Manor, Pretoria, Gauteng Province.
The GSf
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 represented its constituent
members in
interactions with the Agricultural Products Division of the
Johannesburg Stock Exchange (the "APD* previously
"SAFEX");
this conduct has ceased
1.7.
"Senwes" means Senwes Limited, a company registered and
incorporated in accordance with the laws of the Republic
of
South-Africa with registration number 1997/005338/06 and with its
registered office and main place of business at 1 Charel
de Klerk
Street, Klerksdorp, North West Province, South Africa;
1.8.
"Parties"
means
the Commission and Senwes;
1.9.
"Respondent"
means
for purposes of this agreement Senwes;
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.
"Tribunaf
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
Floor,
Muiayo building (Block C), the dti Campus, 77 Metntjies 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"), Vrystaafse
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
complaint initiation was made, but by all'members and shareholders
of
GSL
In
the circumstances, on 25 May 2010 the
Commissioner
expanded
the investigation to refer to afl seventeen (17) respondents.
2.3.
The
Commission
conducted
its investigation and concluded that 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
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
thB
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 basts 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.
2.4.2.
It was the
GSf'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
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
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 at! competitors in the
provision
of storage services, the joint determination of the daily storage
rate amounts to prohibited price fixing in that it
quite simpiy
amounts to an agreement between firms in a horizontai 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 sates
transactions in the physical market
2.5.
The
Commission
took
a decision to refer to the
Tribunal
its
complaint that is described above.
3.
Statement of conduct by Senwes
Senwes
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, to the extent that it competes with
the other Respondents.
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,
Senwes
accepts
that a contravention of section 4(1)(b)(i) may iead to the
imposition of an administrative penalty where the
Tribunal
deems
it appropriate.
4.2.
The parties have agreed that Senwes will pay an administrative
penalty in the amount of R 7 628 670.36
4.3.
This amount constitutes 4% (four per cent) of Senwes' total grain
siio turnover for the 2009 financial year;
4.4.
Senwes
will
pay the amount set out in paragraph 4.2 above to the Commission in
four consecutive payments as follows:
43.1.
R
2 000 000 within 10 days of confirmation of this
Consent
Agreement
by
the
Tribunal;
4.3.2.
R 2 000 000 on or before 31 December 2011;
4.3.3.
R 2 000 000 on or before 30 June 2012;
4.3.3
R 1 828 670.36 on or before 31 December 2012.
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.
Senwes
agrees to fully cooperate with the
Commission
in
relation to the prosecution of the complaint referral. Without
limiting the generality of the foregoing,
Senwes
specifically
agrees to:
5.1.1.
Testify in the complaint referral (if any) in respect of alleged
contraventions covered by this
Consent
Agreement,
to
the extent that its employees are able to provide assistance in this
regard (in the light of the fact that various persons
involved in
this matter are no longer employed by
Senwes);
and
5.1.2.
To the extent that it is in existence and has not already been
provided to the Commission (it being recorded that Senwes
has
already made full disclosure to the Commission), 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.
Senwes
agrees
that it will in future not engage in prohibited practices that
constitute contraventions of section 4(1 )(b) of the Act.
5.3.
Senwes
has
implemented a competition law compliance programme incorporating
corporate governance (which has been developed by it and
its
advisors) designed to ensure that its employees, management,
directors and agents do not engage in future contraventions
of the
Competition Act. in
particular,
Senwes
shall:
5.3.1.
Continue to implement and monitor such competition policy and
compliance programme;
5.3.2.
Continue to provide training on competition law compliance on issues
particularly relevant to Senwes and its employees
and officials;
5.3.3.
Continue to provide training on competition law compliance to all
persons and/or officials employed by Senwes after the
confirmation
of this
Consent
Agreement
by
the Tribunal;
5.3.4.
update the competition policy and training annually to ensure
Senwes'
continued
compliance with the Act (for a period of three years after the
confirmation of this consent agreement by the Tribunal);
5.4.
Senwes
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
Senwes
relating
to any alleged contravention by the
Respondents
of
the Act that is the subject of the Complaint and
Commission's
investigation
under case no 2009Mar4349
Dated
and signed at Klersdorp on the 21
st
day
of June 2011.
For
Senwes
Chief
Executive Officer
Dated
and signed at Pretoria on the 23rd
t
day
of June 2011.
For
the Commission
Competition
Commissioner