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SAFLII Note: Certain personal/private details of parties or witnesses have been
redacted from this document in compliance with the law and SAFLII Policy
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: CR029Sep09/SA203Mar23
In the matter between:
The Competition Commission Applicant
And
Cape Gate (Pty) Ltd Respondent
Panel: G Budlender (Presiding Member)
I Valodia (Tribunal Member)
A Ndoni (Tribunal Member)
Heard on: 23 June 2023
Decided on: 23 June 2023
Settlement Agreement
The Tribunal hereby confirms the settlement agreement as agreed to and proposed by
the Competition Commission and Cape Gate (Pty) Ltd annexed hereto.
Presiding Member
Adv. Geoff Budlender SC
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Date: 23 June 2023
Concurring: Prof. Imraan Valodia and Ms Andiswa Ndoni
IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
(HELD IN PRETORIA)
CC Case No: 2008Apr3696
CT Case NO: ... ...........
In the matter between
THE COMPETITION COMMISSION Applicant
and
CAPE GATE (PTY) LTD Respondent
SETTLEMENT AGREEMENT BETWEEN THE COMPETITION COMMISSION AND
CAPE GATE (PTY) LTD IN RESPECT OF AN ALLEGED CONTRAVENTION OF
SECTION 4(1)(b)(i), (ii) and (ili) OF THE COMPETITION ACT, 1998 (ACT NO. 89 OF
1998), AS AMENDED
1. PREAMBLE
The Competition Commission and Cape Gate (Pty) Ltd hereby agree that an
application be made to the Competition Tribunal for the confirmation of this
Settlement Agreement as an order of the Competition Tribunal in terms section
49D(1) read with section 58(1)(a)(i) of the Competition Act 89 of 1998, as
amended, in respect of a contravention of section 4(1Xb)(i) and (i) of the Act.
2. DEFINITIONS
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For the purposes of this Settlement Agreement the following definitions shall apply:
2.1. "Act" means the Competition Act, 1998 (Act No. 89 of 1998), as amended;
2.2. "AMSA" means ArcelorMittal South Africa Limited, a company duly incorporated
and registered in terms of the company laws of the Republic of South Africa, with its
principal place of business at Roger Dyason Road, Pretoria West, Pretoria, Gauteng;
2.3. "Cape Gate" means Cape Gate (Pty) Ltd, a company duly incorporated and
registered in terms of the company laws of the Republic of South Africa, with its
principal place of business at Nobel Boulevard, Vanderbijlpark, Gauteng;
2.4. "Cisco" means Cape Town Iron Steel Works (Pty) Ltd, a company duly
incorporated and registered in terms of the company laws of the Republic of South Africa,
with its principal place of business at 1 Fabriek Street, Kuilsrivier, Cape Town, Western
Cape;
2.5. "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
Mulayo Building (Block C), the DTI Campus, 77 Meintjies Street, Sunnyside, Pretoria,
Gauteng;
2.6. "Commissioner'' means the Commissioner of the Competition Commission, as appointed by the Minister of Trade and Industry and Competition in terms of section 22(1) of the Act;
2.7. "Days" means business days, being any day, which is not a Saturday, Sunday or
public holiday gazetted in the Republic of South Africa from time to time;
2.8. "Long Steel Complaint" means the complaint initiated by the Commission on 22 April 2008 against Scaw, AMSA, Cisco and Cape Gate for alleged contravention of sections 4(1)(b)(i) and 4(1)(b)(ii) of the Act for fixing the price and dividing the market for long steel products, and referred to the Tribunal on 1 September 2009
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under CT Case Number: CR029Sep09;
2.9. "Parties" means the Commission and Cape Gate;
2.10. “Respondents" means the following firms, as cited in the Commission's Referral Affidavit of 1 September 2009, AMSA, Scaw South Africa (Pty) Ltd, Cape Gate, Cisco and SAISI;
2.11. "SAISI" means the South African Iron and Steel Institute, a non-profit organisation or association which describes itself as serving the collective interests of the primary steel industry in South Africa, with its address at 21st floor SMU Building, comer Andries and Schoeman Streets, Pretoria;
2.12. "SARCEA" means the South African Reinforced Concrete Engineers' Association;
2.13. "Scaw" means Scaw South Africa (Pty) Ltd ("Scaw"), a company duly
incorporated and registered in terms of the company laws of the Republic of South
Africa, with its principal place of business at Union Junction, Johannesburg, Gauteng;
2.14. "Settlement Agreement" means this agreement duly signed and concluded
between the Commission and Cape Gate;
2.15. "Steel mills" means AMSA, Scaw, Cape Gate and Cisco, who are steel mills that
produce, inter alia, long steel products in South Africa, and who are members of SAISI;
and
2.16. "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 1st
Floor, Mulayo Building (Block C), the DTI Campus, 77 Meintjies Street, Sunnyside,
Pretoria, Gauteng.
3. BACKGROUND TO THE LONG STEEL COMPLAINT INITIATION
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3.1 The Long Steel Complaint emanates from a complaint that was initiated by the
Commissioner in April 2008 (under CC Case Number: 2008Apr3696) against producers
of long and flat steel products in South Africa (i.e. "steel mills" and "steel merchants"}, for
possible contraventions of sections 4(1)(b) and 5(1) of the Act. The Commissioner
subsequently extended the April 2008 complaint initiation by adding the SAISI as one of
the parties to be investigated.
3.2 On 19 June 2008 the Commission conducted a search and seizure operation in
terms of section 46 of the Act ("dawn raid") at the premises of Highveld, Cisco and SAISI.
Subsequent to the dawn raid, Scaw applied for leniency in terms of the Commission's
Corporate Leniency Policy for its involvement in alleged price fixing and market allocation
in the market for in relation to rebar, wire rod, sections (including rounds, squares,
angles and profiles).
3.3 In the leniency application, Scaw, inter alia, alleged that there has been a long-
standing culture of cooperation amongst the steel mills regarding the prices to be
charged, and discounts to be offered, for their steel products such as rebar, wire rod,
sections (including rounds and squares, angles and profiles). The cooperation
extended to arrangements on market division.
4. COMMISSION'S INVESTIGATION AND REFERRAL
4.1 In addition to information submitted by Scaw in its leniency application, the
Commission conducted its own investigations which largely confirmed the allegations
made by Scaw and provided further evidence of anticompetitive practices involving
both price fixing and market division in the market for the production of long steel
products, in contravention of section 4(1)(b) of the Act.
4.2 The available evidence suggests that this conduct has ceased.
4.3 On 1 September 2009 the Commission referred the Long Steel Complaint against
four (four) steel mills namely, AMSA, Scaw, Cape Gate and Cisco, and SAISI. The
four (four) steel mills namely, AMSA, Scaw, Cape Gate and Cisco, and SAISI. The
steel mills are producers of long steel products in South Africa and is a non-profit
organization representing all the primary steel producers in South Africa which
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functions mainly through its council and various committees. The steel mills are
members of SAISI.
4.4 Cape Gate is cited as the 3rd {third) respondent in the Commission's Long Steel
Complaint Referral.
4.5 There are four aspects to the allegations made against the respondents set out in
the Commission's complaint referral:
4.5.1 The first aspect of the alleged contravention concerns price fixing in
contravention of section 4(1)(b)(i) of the Act. The Commission alleges that
representatives of the respondents attended meetings and/or engaged in informal
discussions, sometimes by telephone or correspondence (including emails), through
which:
(i) information regarding the selling prices of long steel products was exchanged
and/or discussed;
(ii) information regarding discounts and/or discounting structures or levels ill
respect of long steel products was exchanged and/or discussed;
(iii) agreements, arrangements and/or understandings were reached regarding the
selling prices of long steel products and the discount structures or levels to be
applied to them.
4.5.2 The second aspect of the alleged contravention concerns the fixing of trading
conditions in contravention of section 4(1)(b){i) of the Act. The Commission' alleges
that in respect of sections, the respondents had an understanding to follow Mittal's
pricing or costing with regard to the transportation of such products.
4.5.3 The third aspect of the complaint concerns the division of markets by
allocating customers, suppliers or specific types of goods or services .in
contravention of section 4(1)(b)(ii) of the Act. The Commission makes the following
allegations in this regard:
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(i) The respondents reached a general understanding that certain customers
belonged to certain of them. Targeting a customer which is regarded as a "traditional
customer" of one of the other respondents could result in retaliation;
(ii) The respondents reached agreements, arrangements and/or understandings
regarding the supply of long steel products to downstream contractors or
merchants who had been awarded contracts to three large construction projects.
The responden!s agreed and/or arranged to allocate amongst themselves to supply
certain shares or quantities of the steel products required for each of the projects.
4.5.4 The fourth aspect relates to information sharing and collusion by the steel mills
through SAISI. SAISI and SARCEA provided some platform through which the
respondents could formally or informally facilitate the achievement of the
agreements, arrangements and/or understandings referred to above.
4.6 On 29 April 2016 Cape Gate filed an answering affidavit opposing the
Commission's referral.
5. ADMISSION
Cape Gate does not admit to a contravention of the Act in respect of the conduct alleged
by the Commission.
6. ADMINISTRATIVE PENALTY
6.1 Cape Gate agrees to make payment of an administrative penalty in the amount of
R1 375 344.32 (One million, three hundred and seventy-five thousand, three hundred
and forty-four Rand and thirty-two cent} within 60 (sixty} days from the date of
confirmation of this Settlement Agreement by the Tribunal.
6.2 This amount does not exceed 10% of Cape Gate's annual turnover in its most
recent financial year.
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6.3 The payment of the administrative penalty is made to secure finality to the
Commission's complaint referral under CC Case Number: 2008Apr369
6.4 Payment of the administrative penalty shall not be construed as any admission of a
contravention of the Act.
6.5 The payment shall be made into the Commission's bank account, details of which
are as follows:
NAME: THE COMPETITION COMMISSION
BANK: ABSA BANK BUSINESS
BANK ACCOUNT NUMBER: [....]
BRANCH CODE: 632005
PAYMENT REF: 2008Apr3696CapeGate
6.6 The Commission shall pay the penalty over to the National Revenue Fund in
accordance with section 59(4) of the Act.
7. AGREEMENT REGARDING FUTURE CONDUCT AND MONITORING
7.1 Cape Gate undertakes to refrain from engaging in any anti-competitive conduct in
contravention of the Act in future.
7.2 Cape Gate will develop, implement, and monitor a competition law compliance
programme as part of its corporate governance policy, which is designed to ensure that
all employees, management and other functionaries do not engage in contravention of
the Act. In particular, such compliance programme will include mechanisms for the
identification, prevention, detection and monitoring of a contraventions of the Act.
7.3 Cape Gate shall submit a copy of the compliance programme to the Commission within 60 (sixty) days of the date of confirmation of the Settlement Agreement as an order of the Tribunal.
7.4 Cape Gate shall circulate a statement summarising the contents of this Settlement
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Agreement to all employees and management within 60 (sixty) days from the date of
confirmation of the settlement Agreement as an order of the Tribunal, and report to the Commission once this obligation has been complied with.
7.5 All reports in relation to the conditions set out in this Settlement Agreement, including but not limited to, the provision of the compliance programme and proof of payment of the administrative penalty contemplated in clause 7 above shall be submitted to the Commission at Collections@compcom.co.za.
8 FULL AND FINAL SETTLEMENT
8.1 This Settlement Agreement is entered into in full and final settlement of the Commission's complaint referral and shall upon confirmation as a consent order of the Tribunal, conclude all proceedings between the Commission and Cape Gate in respect of conduct contemplated under the Commission's complaint referral under CT Case Number: CR029Sep09.
FOR CAPE GATE (PTY) LTD:
Duly authorised signatory
BN COETZEE (Name)
CEO (Position)
FOR THE COMPETITION COMMISSION OF SOUTH AFRICA:
DORIS TSHEPE
The Commissioner
DATED AND SIGNED AT Pretoria ON THE 27th DAY OF March 2023