Sasol move may help farmers

Johannesburg - The Competition Commission said on Monday it had settled a case of excessive pricing and abuse of market dominance by Sasol [JSE:SOL], which the government said could help reduce fertiliser prices.

The commission said the petrochemical company Sasol would divest in five of its fertiliser blending facilities and cease within 25 months all importation of ammonia other than for use in South Africa.

It said an application to confirm the agreement, expected to remain binding for a period of 10 years after the disposal of Sasol's affected assets, would be heard on July 14.

"The pricing and divestiture commitments will remove Sasol's incentive and ability to exclude competitors in fertiliser blending and retailing," the commission said in a statement.

"We note that these remedies do not address the fact that Sasol will remain the sole local producer of ammonia."

The commission said Sasol would sell ammonium-nitrate-based fertilisers on an ex-works basis from its plants at Sasolburg and Secunda.

"We also believe that these changes will create several new opportunities for Sasol Nitro to improve our offering to the end customer, our farmers," Marius Brand, managing director of subsidiary Sasol Nitro said in a separate statement.

Sasol said the restructuring of its fertiliser business would affect 50% of Sasol Nitro employees.

In 2009, Sasol was fined R250.7m as a penalty for fixing prices in the fertiliser and phosphoric acid sectors.

The commission said Sasol Chemical Industries, part of the Sasol group, had settled a dispute over price dominance and exclusionary practices with competitors Nutri-Flo and Profert.

South Africa was also looking to tighten its regulations on the ammonia market, where Sasol Chemical Industries is the sole local producer, officials said.

- Reuters and I-Net Bridge