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[2015] ZACT 42
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Competition Commission v Pedal-On-Marketing CC t/a Maverick Cycles (CR049Jul12/SA208Feb15 (020792)) [2015] ZACT 42; [2015] 1 CPLR 184 (CT) (29 April 2015)
COMPETITION
TRIBUNAL
REPUBLIC OF SOUTH
AFRICA
Case No:
CR049Jul12/SA208Feb15 (020792)
In the matter
between:
The Competition
Commission
..........................................................................................................
Applicant
And
Pedal-On-Marketing
CC t/a Maverick
Cycles
...............................................................................
Respondent
Panel: A Roskam
(Presiding Member)
I Valodia (Tribunal
Member)
A Ndoni (Tribunal
Member)
Heard on: 29 April
2015
Decided on: 29 April
2015
Order
The Tribunal hereby
confirms the consent agreement as agreed to and proposed by the
Competition Commission and Pedal-On-Marketing
CC t/a Maverick Cycles,
annexed hereto marked “A”.
29
April 2015
Date
Presiding
Member
Mr A Roskam
Concurring: Prof.
I Valodia and Ms A Ndoni
IN THE
COMPETITION TRIBUNAL OF SOUTH AFRICA
HELD IN PRETORIA
CT CASE HO.
73/CR/JUL12
CC CASE NO.
2011JUL0155
In the matter
between:
THE COMPETITION
COMMISSION
..........................................................................................
Applicant
and
PEDAL-ON-MARKETING
CC t/a MAVERICK
CYCLES
....................................................
Respondent
In re:
COMPETITION
COMMISSION
..................................................................................................
Applicant
and
FRITZ PIENAAR
CYCLES (PTY) LTD AND 19
OTHERS
.................................................
Respondents
SETTLEMENT
AGREEMENT BETWEEN THE COMPETITION COMMISSION AND PEDAL-ON-MARKETING
CC t/a MAVERICK CYCLES (“MAVERICK”) IN
REGARD TO ALLEGED
CONTRAVENTION OF
SECTION 4(1)(b)(i)
OF THE
COMPETITION ACT 89 OF
1998
, AS AMENDED.
The
Commission
and
Maverick 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 below.
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
Commission in terms of section 49B of the Act under case number:
2011Jul0155;
1.5
"Maverick”
means
a close corporation duly registered in accordance with the laws of
the Republic of South Africa, with its main place of business
at Shop
9, H Merest Centre, 38 - 42 Old Main Road, Hilicrest, KwaZulu- Natal;
1.6
“Parties”
means
the Commission and Maverick;
1.7
“
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
Street”), Moneymine 88 CC trading as Hotspot Cycles
(“Hotspot"), Pedal-On-Marketing CC trading as Maverick
Cycles
(“Maverick”), Salojee’s Cycles CC
(“Saiojee’s”), West Rand Cycles CC ("West Rand
Cycles”),
Bowman Cycles (Pty) Ltd f Bowman”), Albatros
Fishing & Cycling, previously named Winners Cycles (Pty) Ltd
(’‘Albatros”),
Omnico (Pty) Ltd {“Omnico"),
Cytek Cycle Distributors CC fCytek”), Coolheat Cycle Agencies
(Pty) Ltd (“Cooíheaf),
Maillot Jaune Trading (Pty) Ltd
(“Maillot Jaune")
;
Tridirect SA (Pty) Ltd f Bicicletta"), Le Peloton (Pty) Ltd (“Le
Peloton”), DBS Distributing CC trading as Thule
Car Rack
Systems (‘Thule"), Pedaling Dynamics CC trading as
Dunkelti Cycles fDunkekf), Summit Cycles (“Summit*),
Dynamic
Choices Two CC trading as Hester Cycles (“Bester”),
Johnson Cycle Works CC f Johnson”), and New Just
Fun;
1.8
"
Settlement
Agreement
”
means
this settlement agreement duly
signed
and
concluded between the Commission and Maverick; and
1.9
“
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.
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
fthe 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 1
st
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 prióes
(“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 Cycie 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: 2011Jul0155, 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 Maverick
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 fine 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 Maverick
admits that its conduct amounts to a contravention of section
4(1Xb)(i) of the Act.
4.2 Future
Conduct
4.2.1 Maverick
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, Maverick 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
4.2.12 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 Maverick
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 Maverick
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, d irectors
and agents do not
engage in future contraventions of the
Competition Act
>4.2.4 Maverick will
ensure that such training materials will be made available to all new
employees joining Maverick.
4.2.5 Furthermore,
Maverick 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 Maverick relating to any alleged contravention by the respondents
of the Act that is the subject of
the Commission^ investigation (CC
Case no. 2011Jul0155).
Dated and signed at
Rosebank on this the 28 day of January 2015.
For Maverick
Michael Bradley
Sole Member
Dated and signed at
Pretoria on this the 19
th
day of February 2015
For the Commission
Tembinikosi Bonakele
Competition
Commissioner