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[2013] ZACT 41
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Competition Commission v West Rand Cycles CC (73/CR/Jul12) [2013] ZACT 41 (30 May 2013)
COMPETITION
TRIBUNAL
REPUBLIC OF SOUTH
AFRICA
Case No: 73/CR/Jul12
016501
In the matter between:
The Competition
Commission
..............................................................................................................
Applicant
and
West Rand Cycles CC
........................................................................................................................
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
Manoim
Concurring: M Mokuena
and I Valodia
IN THE COMPETITION
TRIBUNAL OF SOUTH AFRICA HELD
IN
PRETORIA
CT CASE WO. 73/CR/JUL12
CC CASE NO. 2011JUL0155
In the matter between:
THE COMPETITION
COMMISSION
....................................................................................................
Respondent
and
WEST RAND CYCLES CC
.................................................................................................................
Respondents
In
re:
COMPETITION COMMISSION
............................................................................................................
Respondent
and
FRITZ
PIENAAR CYCLES (PTY) LTD AND 19
OTHERS
..................................................................
Respondents
SETTLEMENT AGREEMENT
BETWEEN THE COMPETITION COMMISSION AND WEST RAND CYCLES CC (‘£WEST
RAND”) iN REGARD TO ALLEGED
CONTRAVENTION OF
SECTION 4(1){b){i)
OF THE
COMPETITION ACT 89 OF 1998
, AS AMENDED.
The
Commission
and
West Rand Cycles 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
(1Xb) and
59
(1 )(a) of the Act on the terms set out below.
1.
DEFINITIONS.
For
the purposes of this Settlement Agreement the following definition
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 DT! 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
Commission in terms of section 49B of the Act under case number:
2011
Jul0155;
1.5.
"
Settlement
Agreement”
means
this settlement agreement duly signed and concluded between the
Commission and West Rand;
1.6.
"West
Rand”
means
a close corporation duly registered in accordance with the laws of
the Republic of South Africa, with its main place of business
at 29
Voortrekker Road* Mind a tore North, Gauteng.
1.7.
“
Parties”
means
the Commission and West Rand;
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”),
Saiojee’s Cycles CC (“Salojee's"), West Rand Cycles
CC (“West Rand Cycles”), Bowman Cycles (Pty) Ltd
(“Bowman”), Albatros Fishing & Cycling, previously
named Winners Cycles (Pty) Ltd (“Albatros”), Omnico
(Pty)
Ltd (‘'Omnico”), Cytek Cycle Distributors CC (“Cytek”),
Coolheat Cycle Agencies (Pty) Ltd (“Coolheaf),
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 (‘Thule”), Pedaling Dynamics
CC trading as
Dunkefd Cycles (“Dunkeld”), Summit Cycles (“Summit”),
Dynamic Choices Two CC trading as Bester
Cycles (“Bester").
Johnson Cycle Works CC (“Johnson”), and New Just Fun.
2. THE 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
49B 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 complaint 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:
2011Jul0155t 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 COMMISSION’S
REFERRAL
3.1. Following its
investigation, the Commission concluded that the conduct by West Rand
together with other respondents constituted
a contravention of
section 4(1 )(b)(t) 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 retaiiers 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. West Rand admits
that its conduct amounts to a contravention of section 4(1 )(b)(i) of
the Act.
4.2, Future Conduct
4.2.1. West Rand agrees
to fully cooperate 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. West Rand specifically
agrees to:
4.2.1.1. Testify before
the Tribunal regarding the conduct and events.forming the factual
basis of the Commission’s referral
affidavit and which are
covered by this Settlement Agreement; 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.
West Rand agrees that it will
in
future refrain from participating in 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. West Rand 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. West Rand will
ensure that such training materials will be made available to all new
employees joining West Rand.
4.2.5. Furthermore, West
Rand 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 West Rands relating to any alleged
contravention by the respondents of the Act that is the subject of
the Commission’s investigation (CC Case no. 2011 JUL 0155).
Dated and signed at
Krugersdorp on this the 26th day of March 2013
For
West Rand
Eben
Venter
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 on
this the 29 th day of May 2013
For
the Commission
Competition
Commissioner