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[2012] ZACT 14
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Competition Commission v Engen Petroleum Ltd (06/CR/Mar 10) [2012] ZACT 14; [2012] 1 CPLR 69 (CT) (22 February 2012)
COMPETITION TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case No:06/CR/Mar10
In the matter between:
The Competition Commission
…..........................................................................
Applicant
and
Engen Petroleum Ltd
…....................................................................................
Respondent
Panel
:
A Wessels (Presiding Member),
M Mokuena (Tribunal Member) and M Holden (Tribunal Member)
Heard on : 22 February 2012
Decided on : 22 February 2012
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 M Holden
IN THE COMPETITION! TRIBUNAL OF
SOUTH AFRICA
HELD IN PRETORIA
CT Case No. o6/CR/Mar 10
CG Case No. 2009Jan4223
In
the
matter
between
CMPETITION COMMISSION
…................................................................................................................................
Applicant
and
ENGEN PETROLEUM LIMITED
….......................................................................................................................
Respondent.
in re
CHEVRON
SA
(PTY)
LTD
….........................................................................................................
First
Respondent
ENGEN PETROLEUM LIMITED
…..........................................................................................................
Second
Respondent
SHELL SA (PTY) LTD
….............................................................................................................
Third
Respondent
TOTAL SA
(PTY)
LTD
…..........................................................................................................................
Fourth
Respondent
MASANA
PETROLEUM SOLUTIONS (PTY) LTD
…...................................................................................
Fifth
Respondent
SOUTH
AFRICAN BITUMEN ASSOCIATION
….........................................................................................
Sixth
Respondent
SASOL
LIMITED Seventh Respondent
TOSAS (PTY) LTD Eighth Respondent
SETTLEMENT AGREEMENT
BETWEEN THE
COMPETITION COMMISSION
ENGEN
PETROLEUM
LIMITED IN RESPECT OF AN ALLEGED CONTRAVENTION OF
SECTION
4{i).{b)(i)f
OF THE COMPETION ACT, 1998 (ACT NO.89 OF 1998), AS AMENDED
The Commission
and Engen Petroleum Limited (“Engen”) hereby, agree that
application be made to the competition Tribunal
for the confirmation'
of this Settlement Agreement as an order of the. Competition Tribunal
in terms' of section 27(1 )(d) read
wife
section 58
(1) (a) (iii)
of
the
Competition Act,
1998
{Act
No.
89
of
1998},
as
amended, on the terms set out below. 1.
1. Definitions
For the
purposes of this Settlement agreement the following
definitions
shall
apply:
1.1.
"Act'
means the
Competition Act, 1998
-
(Act
No..
89
of
1998}
as amended
1.2.
"Bitumen*
means
a residual
fraction'
of
crude-
oil,-
a
mixture
of organic components that- are highly viscous, black and sticky;
1.3.
"Chevron"
means
Chevron SA (Pty) Ltd a
company
duly
Incorporated with limited
liability
in'
terms
of the
company
l
aws
of the the Rep
ublic
of,
South Africa,, with its principal place
of
business
at
19
DF
Malan
Street Cape Town;
1.4.
"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 f
81
Floor,
MuIayo
Building
(Block
C,
the
DTI Campus,
77
Meintjie's
Street,
Sunnysicfe,
Pretoria,
Gauteng;
1.5.
"Commissioner''
means'-
the -Commissioner, of
the
Competition
Commission,
appointed
in terms of section 22 of the Act;
1.6.
“Complaint”
means
the' complaint initiated-
by
the
Commissioner of the Competition Commission in terms of section
49B
of
the Act under-ease number 2009Jan4223;
1.7.
"Settlement Agreement?'
means
this-agreement duty signed and concluded between the Commission and
Engen;-
1.8.
"CLP"
means
the Corporate Leniency Policy prepared and issued by- the
Commission'
as
a guideline,
to
clarify
the Commission's policy approach on matters failing within, its
Jurisdiction in terms.of the Act;
1.9.
"Engen
“
means
Engen Petroleum Limited, a company duiy incorporated and- registered
in terms of the company laws of the Republic of South
Africa with its
principal p!ac^ .'of business at Btsjeh'tSourt Thfbault Square,
corner of Riebeeck and Long Streets, Cape Town.
1.10
"Masana”
means
Masana Petroleum: Solutions (Pty} Limited, a
'company
duly
incorporated and registered
7
in terms of
the company ia.ws of the Republic of South Africa with its principal
place of business at 10 Junction. Avenue', Parktown,
Johannesburg.
1.11.
"Parties"
means
the' Commission and Engen;
1.12.
"SABITA"
means
Southern African Bitumen Association (“SABITA") a:
voluntary
nonprofit
association with-its. principal place of business at 5 Lonsdale,
Lonsdale
Wifey,
P'iheiands;
Cape Town;
1.13.
"Sasol
means
Saso! Limited, {-Saso'i-}, a- company duly incorporated and
registered in
terms of the company iaws of the Republic of South Africa, with its
principal place of business at i
:
Sturdee
Avenue, Rbsebanfe, Johannesburg;
1.14.
"Shell"
means.
Shelf SA (Pty) Ltd;
(-Shell).
a-.company
duly incorporated and
registered. trf'terrrfs of the
company laWs- of the- Republic of 'South Africa,- with Its principal
place of business at Shell House;
9 Riebeeck Street cape Town;
1.15.
"Tosas"'
means
1
Tosass
(Pty)
Ltd (Tosas"), a company duly incorporated and
registered in
terms of the company la^.s.of the
Republic
of
South Africa, with its. pri'ncipaJ place of. business at
12'Commercial.
Road,
Wadevilte,
Johannesburg, The eighth'respondent is a wholly owned subsidiary of
the seventh respondent. Prior 'to:'Aprif.2'00S-,
the
1
eighth
respondent was a jointventure between Sasol and Total in terms of
Which Sasdf owned
70^
of
ihe issued share capital and Total owned
30%';
1.16-.
'Totar
means
Total SA (Pty) Ltd .("Total!,, a company duly incorporated and
registered In terms of the company iaws of'the Republic
of South
Africa, with it&
principal
place: of business
at
Total
House,- 3 Blerma'nn Avenue; Ro^ebank,-Johannesburg;
1.17
"Tribunat
means
tfte Competition Tribunal of South. Africa, a statutory body
establishes"
-in terms of section' 26 'of
the
Act,
.frith
its'
principal place of business
at;
3*
Floor,
Mulayo
building
(Block C), the DTI Campus,'77
fences
Street
Sunnyside, Pretoria, Gauteh'g,
2. The
Complaint and Complaint Investigation
2.1
On 10
September
2008,.
S8$pf
together
yvitfx its-'subsidiaries, including 'Tpsas,
applied, for
and'
subsequently
obtained
conditional
immunity
in terms of
paragraph '12' of
the
applicant's;
CtP,
in.
respect:
of'.their
participation-
in the'
development of, and agreement to adopt,
.a.
pricing'mechanism
Iri respectoT the
sale of base b'ibmen
and
bituminous
product's.
2.2
in its
application for leniency Saso/'aiieged'th'at-it, together with
Chevron,
Ehgem
Shelf,
Total, Masana
and
Tosas
being, parties in a horizontal relationship.,
had
contravened;,
section 4(ij{b)(i) of
the
Act
by
engaging
in
price fixing by agreeing to.
a-
mechanism
to calculate
the
WL8
.P
(Wholesale List Selling'Priced and fcxthe development
and'implementation
of
the
BPAF
(Bitumen Prs
£.e
Adjustment
Factor) in relation to
the
sale
of
base
bitumen-and bituminous products.
2.3. On 12
January 2009,
and
pursuant'to
$&sot's
lepiendV
application,
the
applicant
Initiated a .complaint in terms of section 49(B) (1 > of
the
Act-
against
the'
respondents
as described in the complaint referral The applicant conducted an
investigation- into
the
relevant
facts disclosed by
Sasol
and
concluded
that
Chevron,
Eng'en, $tieti; Total, Masma
F
.
S'asoi
and
Tosas
had
indeed
engaged in restrictive horizontal practices^.in contraventibn'Of
section 4(1 ){b){i). of the Act.
2.4. The
Commission's
investigation revealed that:
2.4.1.
in
and during,
the
period
commencing
from
September
2000 to December 2QQ9,
and
possibly
thereafter,
Chevon,
Engem
Shell,
Total,
Masana,
Sssol
and Tosas,
being
"parties
in
a'horizontal
relationship, acting through their representatives,, entered into
various agreements; and.-engaged" in conduct'that
involved'concerted pra'btices'andf'orto'bk decisions that were
intended to directly and, indirectly
fix
the
purchase or selling price of bitumen' and bituminous''
products
in
the
Republic:-
in
contravention" of section 4(:1j(b){i) of
'the
Act
2.4.2.
Chevron,
Engen, Shell, Total, Sksol
and
Tosas.-are'
producers--and / or
suppliers
of bitumen, arid compete With one another in the production.and / or
sate of bitumen and bituminous products in- the
Republic: Chevron,'
Ehgeh. Shelly Total, aqd Sasol are also members.of
SA&}TA
f
a n.on-profit
organisation thai represents
infer
alia
producers'
of and applicators of bituminous products-.
2.4.3.
The:
respondents, operating through SAB/FA as weli as through other
-forms of co'mmunicattohs-y. including bilateral communications
between them, ;agreed,a formula for' determining me.- pricing of
base bitume'rt and bituminous products.
2.4.4.
Historically, prior to the'Act coming into force, the petroleum and
energy-companies, calculated the prices for bitumen
with reference*
to a
'n
industrywide
retail'
price'
list
for bitumen
and
bituminous,
products. "This was cafcuEatecj-codecfiv.eiy by all petrofeum
companies'and was referred to. as the. Wholesale-List
Seeing Price
fVVLSP"):. From 1086 until 2000 foe WLSP was government
sanctioned and exempted from the price-fixing prohibitions
that
applied at the time ("the WLSP exemption").
2.4.5. The
WLSP for bitumen was made- up of the
In
Bond
Landed Costs fiBLC),- which essentially was an import-parity based
formula where various transport related costs, were added,
to a
ifre.e On. Board ("FOB")
heavy'fuel
oil
price'
attypica!
international refining centres'. This base price was replaced
finally by the Durban Bunker price/.-Added'to the IBLC
to arrive at
the- WLSP were the
1
SABITA'fevyi
the margin and the- Road Equalisation Factor f REF"), which was
subsequently replaced by the Crude Oil Pipeline
tariff.
2.4.6
chevron,
Engen,,
Shell, total, Masana, Sasol
and
Tosas
and
other role players, in the .industry, in contravention of section
4-pfthe Act,, discussed the'establishment of'a mechanism
to set the
WISP of bitumen in relation to the
Bitumen
Pricing.
Index
(BPf)
f
later called
the.
Bitumen
prib'fe
AdjustementTactor' (BPAF), The- respondents adopted the BPfr'BPAF'as
a basis for adjusting their fist prices from time
to time,
3. The Complaint Referral
3.1. The
Commission
referred
the above complaint to the
Tribune!
on
4 Marcfr201Q.
3.2.
Engen
has
engaged with the.
Commission
in
settlement discussions since May 2010.
4. Statement of Conduct
Engen
admits
that-it has contravened section 4(.1)£b)(i) of the Act, in
that-the bitumen department in lis Engen Sales-and Marketing
division (ESM) agreed with its.-competitors to -a"; mecha'nis'm
to calculate its
:
WLSP
(.Wholesale List Selling .Price), and to, the development
&M
implementation
of the BPI/BPAF in relation to the- sale, of penetration grade
bitumen in South Africa.
5. Agreement
concerning future conduct
5.1
Eng
en
agrees
to:
5.1.1. fully
cooperate with the Commission in relation to the prosecution of the
complaint referral. Without; limiting the generality
of. the
foregoing,
Engen
specifically
agree
:
es
to:
(a) testify in the. complaint
referral (if any} in respect of alleged contraventions covered by
this Settlement Agreement; and
(b)
to
the extent that it' is in" existence, provide- evidence;
Written or otherwise,, which is- in its' possession or under
irs
control, concerning' the alleged contravention's contained In this
Settlement Agreement;
5.1.2. desist from the conduct
described above;'
5.1.3. further develop,
implement and monitor its competition law compliance-programme
incorporating; corporate governance designed
to ensure th.St its
employees^ management, directors andagehts .do not engage in future'
contraventions of the Act in particular,,
such compliance programme
will:
5.1.3.1. include a. competition
policy to be drafted and implemented
5.1.3.2.
provide specific- training, on competition law aspects particularly
relevant
to-'Eng&n;-
5.1.3.3
ensure: that such training will be made.available, to all new
employees joining
Engen-.
Furthermore,
Eftgeh
Wiil
update such training annually;
5.1.4
submit a copy
of such compliance programme to the' Commission within 60 days of
the date of confirmation' of the Settlement'Agreement-
as
:
an
order by the Competition Tribunal;;
5.1.
;
5.
To.circulate a. statement summarising the-contents of
this-Settlement-Agreement to all management and operational staff
employed,
at-
Engen
within
60 days from the date of confirmation of this Settlement Agreement'
by the Tribunal';
6.
Administrative Penalty
6.1.
Having
regard to the provisions of sections §8<
:
1}|a)(iii}
as read
wftfr
"sections
50(1 fta),
59(2) and- 59(3) of the Act,
Erig&n
accepts
that it is liable' to' pay an administrative penalty.
The parties
have agreed that
Engen
will
pay;
an--
administrative
penalty in
the
amount
b'f R28 800 000* (twenty"eight
million
eight
hundred thousand rand);
6.2.
This-
amount
cJq^s
not
exceed
10%
of
En$&h'$.
total
artriuat income- in the
Republic- and
its:exports'from'-the Republic for its 20Q9 financial year;.
6.3.
Engen
will
pay- the amount set out in paragraph 6-1 above' to the Commission
within iSO business. dav.s-from
the date of confirmation of-this Settlement" agreement by the
Tribunal,
6.4.
The
penalty
must be'
paid
Into
the
Commission's'
bank'
account"
which is as
follows'-:
NAME:'THE
COMPETITION COMMISSION
FEE
ACCOUNT
BANK: ABSA BANK, PRETORIA
ACCOUNT NUMBER; 4650778576
BRANCH CODE': 323345
6.5.
The penalty
will be pa[d over' by the Commission, to the
National
Revenue
Fund
in accordance with the provisions of section ;59(4) of the
Act;
7.
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'
Engen
relating
to any "alleged contravention by. the respondents of the Act
that is
:
the
subject of. the Commission's investigation referred to- the Tribunal
under CT Case Ho. 06/CR/Mar10
Dated
and signed at
CAPE
TOWN
on
the
10
th
day of
February
2012
For
Engen Petroleum Limited
Chief
Executive Officer
Dated and
signed at
Pretoria
on the
10
th
day of
February
2012
For
the Commission
Competition
Commissioner