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[2013] ZACT 40
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Competition Commission v Bowman Cycles (Pty) Ltd (73/CR/Jul12) [2013] ZACT 40 (30 May 2013)
COMPETITION
TRIBUNAL
REPUBLIC
OF SOUTH AFRICA
Case
No: 73/CR/Jul12 016493
In
the matter between:
The
Competition Commission
........................................................................................
Applicant
and
Bowman
Cycles (Pty) Ltd
...........................................................................................
Respondent
Panel:
N Manoim (Presiding Member),
M
Mokuena
(Tribunal
Member) and
I
Valodia (Tribunal Member)
Heard
on: 29 May 2013
Decided
on: 30 May 2013
Order
The
Tribunal hereby confirms the following attached consent agreements,
as agreed to and proposed by the Competition Commission
and the
Respondent:
1.
The main agreement, dated 04 April 2013.
2.
Annexure A thereto, dated 29 May 2013.
Presiding
Member
N
Manoim
Concurring:
M Mokuena and I Valodia
IN
THE COMPETITION TRIBUNAL OF SOUTH AFRICA
HELD
IN PRETORIA
CT
CASE NO. 73/CR/JUL12
CC
CASE NO. 2011JUL0155
In
the matter between:
THE
COMPETITION COMMISSION
...................................................................................
Applicant
and
BOWMAN
CYCLES (Pty) Ltd
.........................................................................................
Respondent
In
re:
COMPETITION
COMMISSION
...........................................................................................
Applicant
and
FRITZ
PIENAAR CYCLES (PTY) LTD AND 19 OTHERS
..............................................
Respondent
SETTLEMENT
AGREEMENT BETWEEN THE COMPETITION COMMISSION AND BOWMAN CYCLES (Pty)
Ltd (“BOWMAN") IN REGARD TO ALLEGED
CONTRAVENTION OF
SECTION 4(1)(b)(i)
OF THE
COMPETITION ACT 89 OF 1998
, AS AMENDED.
The
Commission
and
Bowman Cycle's hereby agree that application be made to the Tribunal
for the confirmation of this Settlement Agreement as
an order of the
Tribunal in terms of
section 49D
as read with
section 58
(1)(b) and
59
(1 )(a) of the Act on the terms set out beiow.
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.
"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 Building C, Mulayo Building, the DTI Campus, 77
Meintjies Street, Sunnyside, Pretoria, South Africa;
1.3.
“
Commissioner"
means
the Commissioner of the Competition Commission appointed in terms of
section 22 of the Act;
1.4.
“
Complaint"
means
the complaint initiated by the Commissioner of the Competition Com
mission in terms of section 49B of the Act under case
number;
2011Jui0155;
1.5.
“
Settlement
Agreement'
means
this settlement agreement duly signed and concluded between the
Commission and Bowman;
1.6.
“Bowman” means a company duly registered in accordance
with the laws of the Republic of South Africa, with its
main place
of business at 153 Bree Street,Cape Town, Western Cape.
1.7.
“
Parties”
means
the Commission and Bowman;
1.8.
“
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 Building C, Mulayo Building, the DTI Campus, 77
Meintjies Street, Sunnyside, Pretoria, South Africa.
1.9.
“
Respondents”)
means
all the firms that are cited as the respondents in the Commission’s
complaint referral filed under Competition Tribunal
Case number:
73/CR/JUL12 respectively, namely: Fritz Pienaar Cycles (Pty) Ltd
(“FPC”), Melody Street 18 (Pty) Ltd
(“Melody”),
Moneymine 88 CC trading as Hotspot Cycles (“Hotspot”),
Pedal-On-Marketing CC trading as Maverick
Cycles ("Maverick”),
Salojee's Cycles CC (“Salojee’s"), West Rand Cycles
CC (“West Rand Cycles”)f
Bowman Cycles (Pty) Ltd
(“Bowman”), Aibatros Fishing & Cycling, previously
named Winners Cycles (Pty) Ltd (“Aibatros"),
Omnico (Pty)
Ltd (“Omnico”), Cytek Cycle Distributors CC (“Cytek"),
Cootheat Cycle Agencies (Pty) Ltd
fCooiheaf), Maillot Jaune Trading
(Pty) Ltd (“Maillot Jaune”), Tridirect SA (Pty) Ltd
(“Bicicletta”),
Le Peloton (Pty) Ltd (“Le
Peloton”), DBS Distributing CC trading as Thule Car Rack
Systems (f'Thuie,,)1 Pedaling
Dynamics CC trading as Dunkeld Cycles
(“Dunkefd”), Summit Cycles ("Summit”),
Dynamic Choices Two CC trading
as Bester Cycles fBester”),
Johnson Cycle Works CC (“Johnson"), and New Just Fun.
2.
COMMISSION'S INVESTIGATIONS AND FINDINGS
2.1.
In September 2008, the Commission received information from
anonymous source regarding the meetings which allegedly took
place
in Cape Town and Gauteng between various cycling retailers and
wholesalers. The Commission was also provided with minutes
of one
such meeting. These minutes were also posted on the Hub Website, a
web based forum for cycling enthusiasts in the cycling
industry. The
minutes provided to the Commission were of a meeting which occurred
on 10 September 2008 (“the September
2008 meeting’’)
in Midrand.
2.2.
As reflected in this minutes, the following key issues were
discussed:
2.2.1.
Increasing gross margins by increasing mark-ups for cycling
accessories from 50% to 75%, and for bicycles from 35% to 50%;
2.2.2.
A proposed time for the price increase (as from the 1st October
2008);
2.2.3.
Getting rid of discounting and of shops undercutting each other;
2.2.4.
Getting wholesalers to provide higher recommended retail prices
("RRPs”) to the retailers and advertise these
prices to
the public,
2.3.
Based on this information, the Commission Initiated a complaint in
terms of section 4SB of the Act, on 5 March 2009 against
FPC and
Cycle Lab (now Melody) under CC Case Number: 2009Mar4326. The
representatives of these firms were identified as having
been the
instigators behind the September 2008 meeting. Both the firms
against whom the complaint was first initiated are cycling
retailers.
2.4.
The Commission later obtained further Information implicating other
firms and the Commissioner amended the first initiation
to include
other respodents on 12 May 2009.
2.5.
Following an investigation, the Commission referred the complain to
the tribunal on 25 June 2010 against 28 respondents who
were both
cycling retailers and wholesalers, including all of the respondents
identified in the amended initiation. On 12 November
2010, the
Commission filed amended notice of motion and supplementary referral
affidavit,
2.6.
Pursuant thereto, the Commission withdrew the first referral on 10
June 2011 against all respondents named in the first referral.
2.7.
On 18 July 2011, the Commissioner then initiated a fresh complaint
under CC Case Number; 2011Jui0155, into the allegations
concerning
primarily the September 2008 meeting and received additional
information from certain respondents pursuant to the
investigation
of this complaint
3.
THE COMMISSIONS REFERRAL
3.1.
Following its investigation, the Commission concluded that the
conduct by Bowman together with other respondents constituted
a
contravention of section 4(1 }(b)(i) of the Act, in that they
agreed, alternatively engaged in a concerted practice to directly
or
indirectly fix prices or other trading conditions. This includes
both the retailers and wholesalers present at the September
2008
meeting since they are in the same line of business in respect of
the sale of bicycles and cycling accessories and equipment,
at the
wholesale and retail levels respectively.
3.2.
In light of its findings, the Commission decided to refer the
complaint on 5 July 2012 to the Tribunal for determination,
4.
AGREEMENTS
4.1.
Admissions
4.1.1.
Bowma n ad mrts that its cond uct amou nts to a contravention of
section 4(1 )(b)(i) of the Act.
4.2.
Future Conduct
4.2.1.
Bowman agrees to fully co-operate with the Commission in relation to
the prosecution of any other respondents who are the
subject of its
investigations and referral to the Tribunal. Without limiting the
generality of the foregoing, Bowman specifically
agrees to:
4.2.1.1.
Testify before the Tribunal to such conduct and events forming the
factual basis of the Commission's referral affidavit
and this
Settlement Agreement as are within Bowman’s knowledge; and
4.2.1.2.
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 set out in the Commission’s
referral affidavit
4.2.1.3.
Desist from engaging in the conduct complained of.
4.2.2.
Bowman agrees that it wilt in future refrain from participating in
the meeting (s) aimed at engaging in a cartel
conduct
which may lead to a possible contravention of section 4(1 )(b) of
the Act.
4.2.3.
Bowman agrees that its employees, management, directors and agents
will attend a competition law compliance training programme
incorporating corporate governance to be provided by the Commission
and designed to ensure that its employees, management, directors
and
agents do not engage in future contraventions of the
Competition
Act.
4.2.4.
Bowman
will ensure that such training materials will be made
available to all new employees joining Bowman.
4.2.5.
Furthermore, Bowman will update and repeat such training materials
annually to ensure on an ongoing basis that its employees,
management, directors and agents do not engage in any future
contraventions of the
Competition Act
5. 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 Bowman relating to any alleged
contravention by the respondents of the Act that is the
subject of
the Commission’s investigation (CC Case no. 2011 Jul0155).
Dated
and signed at Cape Town on this the 14th day of March 2013
For
Bowman
Director
Dated
and signed at Pretoria on this the 4th day of April 2013
For
the Commission
Competition
Commissioner
ANNEXURE
“
A”
The
parties agree that a notice on the terms set out hereunder will be
displayed in a
prominent
place in their premises for a period of 6 months from the date of the
Competition Tribunal’s order.
‘
[Name
of a firm] has settled a complaint referral with the Commission and
has undertaken to ensure full compliance with the provisions
of the
Competition Act 89 of 1998
.
For
further information feel free to contact the Commission on telephone
number: 012 394 3200 or E-mail:CCSA@compcom.co.za.”
Dated
and signed at Pretoria on this the 29th day of May 2013
For
the Commission
Competition
Commissioner