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[2015] ZACT 43
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Competition Commission v Melody Street Trading 18 (Pty) Ltd (CR049Jul12/SA207Feb15(020784)) [2015] ZACT 43; [2015] 1 CPLR 179 (CT) (29 April 2015)
COMPETITION
TRIBUNAL
REPUBLIC OF SOUTH
AFRICA
Case No:
CR049Jul12/SA207Feb15 (020784)
In the matter
between:
The Competition
Commission
.............................................................................................................
Applicant
And
Melody
Street Trading 18 (Pty)
Ltd
.................................................................................................
Respondent
Panel: A Roskam
(Presiding Member)
I Vaiodia (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 Melody Street Trading18
(Pty) Ltd, annexed
hereto marked “A”
29
April 2015
Date
Presiding
Member
Mr A Roskam
Concurring: Prof.
I Vaiodia and Ms A Ndoni
IN THE
COMPETITION TRIBUNAL OF SOUTH AFRICA
HELD IN PRETORIA
CT CASE NO.
73/CR/JUL12
CC CASE NO.
2011JUL0105
In the matter
between:
THE COMPETITION
COMMISSION
...........................................................................................
Applicant
and
MELODY STREET
TRADING 18 (PTY)
LTD
..........................................................................
Respondent
In re:
COMPETITION
COMMISSION
.....................................................................................................
Applicant
and
FRITZ PIENAAR
CYCLES (PTY) LTD AND 19
OTHERS
...................................................
Respondents
SETTLEMENT
AGREEMENT BETWEEN THE COMPETITION COMMISSION AND MELODY STREET
TRADING 18 (PTY) LTD (“MELODY STREET”) IN
REGARD TO
ALLEGED CONTRAVENTION OF
SECTION 4(1)(b)(i)
OF THE
COMPETITION ACT 89
OF 1998
, AS AMENDED.
The
Commission
and
Melody Street 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;
13
“
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:
2G11Jul0155;
1.5
“
Melody Street
”
means
a company duly registered in accordance with the laws of the Republic
of South Africa, with its main place of business at
the Terraces, 1
Silvermoon Close, Steenberg Office Park, Tokai, Cape Town, Western
Cape;
1.6
“
Parties
”
means
the Commission and Melody Street;
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”), Money mine 88 CC trading as Hotspot Cycles
(“Hotspof), Pedal-On-Marketing CC trading as Maverick Cycles
fMaverick”), Saiojee’s Cycles CC fSalojee's”), West
Rand Cycles CC (“West Rand Cycles”), Bowman Cycles
(Pty)
Ltd ("Bowman”), Albatros Fishing & Cycling,
previously named Winners Cycles (Pty) Ltd fAlbatros”),
Omnico
(Pty) Ltd fOmnico"), Cytek Cycle Distributors CC (“Cytek”),
Coolheat Cycle Agencies (Pty) Ltd ("Cool
heat”), Maillot
Jaune Trading (Pty) Ltd f Maillot Jaune"), Tridirect SA (Pty)
Ltd (‘Bidcletta'), Le Peioton (Pty)
Ltd
(“Le
Peioton”)
;
DBS Distributing CO trading as Thule Car Rack Systems (“Thule”),
Pedaling Dynamics CC trading as Dunkeld Cycles (“Dunkeld"),
Summit Cycles (“Summit”)
(
Dynamic Choices Two CC trading as Bester Cycles f Bester’%
Johnson Cycle Works CC (“Johnson”), and New Just Fun:
1.8
‘
Settlement Agreement
”
means
this settlement agreement duly signed and concluded between the
Commission and Melody Street; 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, Mufayo 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 prices fRRPs”)
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 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.
2.8 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 CO Case
Number; 2011Ju!G155, 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
COMISSION’S REFERRAL
3.1 Following its
investigation, the Commission concluded that the conduct by Melody
Street 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 Melody Street
admits that its conduct amounts to a contravention of section 4(1
)(b)(i) of the Act.
4.2
Future
Conduct
Melody
Street 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, Melody
Street 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 Melody Street
agrees that it will in future refrain from participating in meetmg(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 Melody Street
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 Melody Street
will ensure that such training materials will be made available to
all new employees joining Melody Street,
4.2.5 Furthermore,
Melody Street 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 ful! and
final settlement and concludes all proceedings
between the Commission
and Melody Street relating to any alleged contravention by the
respondents of the Act that is the subject
of the Commission’s
investigation {CC Case no, 2011JUL0155).
Dated and signed at
on this the 19
th
day of January 2015
For Melody Street
Andrew Mclean (duly
authorised)
Director
Dated and signed at
Pretoria on this the 19
th
day of February 2015
For the Commissioner
Tembinkosi Bonakele
Competition
Commissioner