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[2011] ZACT 93
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Competition Commission v NWK Ltd (43/CR/Jun11) [2011] ZACT 93; [2012] 1 CPLR 98 (CT) (9 November 2011)
COMPETITION TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No:43/CR/Jun11
In
the matter between:
The
Competition Commission
….........................................................
Applicant
and
NWK
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".
Presiding
Member
A
Wessels
Concurring:
M
Mokuena and A Ndoni
'ANNEXURE”
IN
THE COMPETITION TRIBUNAL OF SOUTH AFRICA
HELD
IN PRETORIA
CT
Case No.
CC
Case No. 2009Mar4349
In
the matter between:
THE
COMPETITION COMMISSION Applicant
and
NWK
LIMITED 3
rd
Respondent
In
re:
THE
COMPETITION COMMISSION Applicant
and
AFGRI
OPERATIONS LIMITED 1
st
Respondent
SENWES
LIMITED NWK LIMITED 2
nd
Respondent
OVK
OPERATIONS LIMITED 3
rd
Respondent
SUIDWES
(PTY) LIMITED 4
th
Respondent
VRYSTAAT
KOOPERASIE BEPERK 5
th
Respondent
OVERBERG
AGRI (PTY) LIMITED 6
th
Respondent
DIE
HUMANSDORPSE KOOPERASIE BEPERK 7
th
Respondent
SENTRAAL-SUID
KOOPERASIE BEPERK 8
th
Respondent
GWK
LIMITED 9
th
Respondent
KAAP
AGRI BEDRYF LIMITED 10
th
Respondent
MGK
BEDRYFSMAATSKAPPY (PTY) LIMITED 11
th
Respondent
TUINROETE
AGRI BEPERK 13
th
Respondent
MOREESBURGSE
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(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 NWK LIMITED ("NWK"), IN RESPECT
OF AN ALLEGED
CONTRAVENTION OF SECTION 4(1)(b)(f) OF THE COMPETITION ACT, 1998
("THE ACT").
The
Commission
and
NWK
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
following definitions shall apply:
1.1.
"Act
1
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, 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
NWK;
1.6.
"Grain
Sifo industry (Pty) Ltd"
is
a private company duly incorporated in accordance with the company
laws of the Republic of South Africa, having its registered
office
at the Grain Building, 477 Witherite Street, The Wilgers, Pretoria,
Gauteng Province. The GSi represents its members in
public forums
wherein matters related to the handling and storage 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.
"NWK"
means
NWK Limited, a company registered and incorporated in accordance
with the laws of the Republic of South-Africa with registration
number 1998/007577/06 and with its registered address, alternatively
principal place of business
at
81
Scholtz Street, Lichtenburg, 2740, South Africa;
1.8.
"Parties"
means
the Commission and NWK;
1.9.
"Respondent"
means
for purposes of this agreement NWK;
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
rd
Floor,
Mulayo building (Block C), the dti Campus, 77 Meintjies 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"), NWK 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 ail seventeen (17) respondents.
2.3.
The
Commission
conducted
its
investigation
and concluded thatthe
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 the fact that they are competitors, the first to
sixteenth
respondents
are
all shareholders or members of the
GSL
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
beiow,
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
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
GSL
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.
The
essence
of
the
conduct complained of
is
that
the daily storage tariff proposed by
GSi
is
agreed
to
and
assented to by ail
ofJfTe
respondents.
Given that the first to sixteenth respondents are ail 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.
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.
The
Commission
took
a decision to refer to the
Tribunal
its
complaint that is described above.
3.
Statement of conduct by NWK
NWK
admits
that it participated, as a member of the GSI, in furnishing the GSI
with information requested by the South African Futures
Exchange in
order to fix the daily grain storage tariff which could be
interpreted as a contravention of. section 4{1)(b)(i)
of the Act as
described above.
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,
NWK
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.
The parties have agreed that
NWK
will
pay an administrative penalty in the amount of R3 295 158,08.
4.3.
This amount constitutes 4% (four per cent) of the total grain silo
storage turnover for the 2009 financial year.
4.4.
NWK
will
pay the amount set out in paragraph 4.2 above to the
Commission
within
10 (ten) days of confirmation of this
Consent
Agreement
by
the
Tribunal.
4.5.
This
payment shall be made into the
Commission's
bank
account, detaiis of which are as foiiows:
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.
NWK
agrees
to fully cooperate with the
Commission
in
relation to the prosecution of the complaint referral. Without
limiting the generality of the foregoing,
NWK
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.
NWK
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.
NWK
shall
continue with developing, implementing and monitoring its
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,
NWK
shall:
5.3.1.
continue to implement a competition policy and compliance programme;
5.3.2.
continue to provide training on competition law compliance on issues
particularly relevant to
NWK
and
its
employees and officials;
5.3.3.
update the competition policy and training annually after
confirmation of this Consent Order and continue to do so on an
annual basis to ensure
NWK's
continued
compliance with the Act.
5.4.
NWK
shall
submit a copy of its 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
NWK
relating
to any alleged contravention by the
Respondents
of
the Act that is the subject of
XheCommission's
investigation
under case no.
2009MAR4349.
Dated
and signed at Lichtenburg on the 14
th
day
of June 2011.
For
NWK
Managing
Director
Dated
and signed at Pretoria on the 23rd day of June 2011.
For
the Commission
Competition
Commissioner