Fin24

Sasol slapped with another huge fine

2010-12-14 16:46

Johannesburg - Petrochemicals giant Sasol [JSE:SOL] has been slapped with a R111m fine for anticompetitive behaviour in its polymers unit.

The Competition Commission on Tuesday said it had reached a settlement with Sasol Polymers, a division of Sasol Chemical Industries in which Sasol admitted that the supply agreement between it and another firm, Safripol, resulted in indirect price fixing.

In its investigation, the commission found that Sasol and Safripol engaged in collusive conduct as a result of the implementation of the supply agreement.

This included adopting a pricing formula and the exchange of information relating to the pricing of polypropylene.
 
Sasol Polymers has agreed to pay a penalty of R111 690 000, which represents 3% of its 2009 total annual turnover derived from polypropylene products.

Sasol will pay more than R250m in fines after the Competition Tribunal previously confirmed a settlement order in which it admitted to cartel conduct in the fertiliser industry.

It was also fined R3.7bn by the European Commission for participating in a paraffin wax cartel in October 2008.
 
The commission referred a case of collusion and excessive pricing against Sasol Chemical Industries and Safripol to the tribunal for adjudication on August 12 2010.

This agreement resolves the collusion aspect of the case.

Sasol has also agreed to stop sharing market-sensitive information, including prices and volumes of polypropylene sold.

It will also amend certain provisions of the supply agreement to ensure that prices are set independently.

The agreement is still to be ratified by the Competition Tribunal.

Safripol has already made a deal with the commission, in which it admitted to contravention of the Competition Act and agreed to pay a penalty of R16.5m representing 1.5% of its total annual (2009) turnover from polypropylene products.

The tribunal has confirmed this agreement.

The commission said it found that Sasol had charged its local customers excessive prices for polypropylene and propylene, which had been in line with import parity pricing.

It said that the findings on excessive pricing have been contested by Sasol and are still to be heard by the tribunal.

The investigation was started after the department of trade and industry raised concerns about polymer pricing and its negative effect on SA's manufacturing sector.

Sasol is the dominant supplier of polypropylene for its own use and that of Safripol, the commission said.

It is also the major supplier of polypropylene to the South African market. Polypropylene is a plastics polymer used by plastics converters to manufacture a wide range of products.

Comments
  • Jan - 2010-12-14 17:36

    This can only be described as a fundamentally sick organisation.

  • ono - 2010-12-14 17:52

    Kill business. This is just another tax collection effort. If you can, get out of SA

  • Francois Smith - 2010-12-14 21:39

    Board of Sasol, it is time to fire Pat Davies and get back that huge money you have paid him. He should be Jacob Zuma's financial adviser at best.

  • Celma - 2010-12-14 22:19

    Sies Sasol - ek dink die politici het by die groot maatskappy geleer om korup te wees. Nog 'n keer sies en hiervoor hoop ek Suid Afrikaners boikot julle petrol

  • Pieter Nel - 2010-12-15 07:10

    I know Pat for many years and he is a honest man and so is his board. I have also worked extensively in Africa and this is an African way to exploit the golden goose.

  • Susannomore - 2010-12-15 07:14

    I worked for Sasol until June this year when I handed in my resignation. All I can say is thank God I distanced myself from this mega-power.

  • JoJo - 2010-12-15 07:38

    The commission doesn't know half of what was realy happening during the time the current management was responsible for the marketing strategy. Apart from patent infringements on the plants, they were strong-arming customers into paying excessive prices. I was there.

  • Ani - 2010-12-15 07:48

    It's easy to say they collided into price fixing, and a lot cheaper for Sasol just to say "guilty" than it is to give their side of the story. If Sasol wanted to, they could just sell their stuff ALOT cheaper than any other company in SA could, and then have a Monopoly. Or...see where the other players are, and agree to be in the same margin, as to be a healthy opponent. I don't see Eskom paying a fine for being a Monopoly, killing any new effort for affordable energy or for price fixing, with the blessing of Government. Now all of us can cry boo hoo and say shame Sasol, or see just how much they actualy do for this Country, as Petrol is just one their products, there are thousands.

  • Colin - 2010-12-15 07:51

    Methinks all these fines that are so liberally being slapped on companies and others could have a negative effect. Have the commisioners ever thought that the businesses could close down one day because of these fines, bankrupt.

  • sanele - 2010-12-15 08:07

    The tribunal needs to come with other ways of countering such behaviour. I tell you, companies like sasol make provisions for such 'fines', I mean they collude knowing very well that the commission will dig it out, they don't have a problem paying the fines, they already made ridiculous gains in the scheme, the fine is more like an 'operational cost' now. I suggest that the commission looks into taping the equity, now that direct hit to investors, let the 'fine' be a % of share capital, control is everything. And maybe, jsut maybe, sasol shareholders will hold the board to greater accountability.

  • Don - 2010-12-15 08:22

    We've always known we are getting ripped off in this country, now it is being exposed. SASOL, having been a leader in their technologies is now becoming and absolute DISGRACE to South Africa. SAME ON YOU for ripping off your very own people and disgracing the very people and their forefathers that paid so dearly to get sasol started in the "sanction years" DISGRACEFUL CONDUCT I SAY.

  • Tony - 2010-12-15 08:42

    Don't punish the Shareholders by fines. Lock up the culprits responsible for the despicable actions

  • AgentM - 2010-12-15 11:50

    I'm sorry, have the shareholders forgotten that they have a board of directors (executive and non-executive) who are meant to be ensure that this un-ethical behaviour doesn't happen. @Tony, if you have a problem with being punished, then pick it up with your directors.. attend an AGM and actually get them to accept responsibility and fall on their sword, after all thats what the draw director fees for....

  • martin albert - 2010-12-15 11:53

    And the directors got paid millions in salaries and inflated bonuses - I wonder if they will repay it based on shareholders are now paying for their illegal actions? Nothing ethical about these guys. They all seem to operate like gov and deployed cadre. Go figure!

  • dave - 2010-12-15 14:56

    little do u guys know, but sasol actually wants to get everything out in the open (Pat Davies actually started the investigations) and they're telling the commission what they did in the past. it's no longer happening, and they've fired all the buggers who stuffed up. sasol is a great company.

  • Be afraid - 2010-12-15 15:19

    The Government finds it difficult to do simple things like fixing a road. Now they meddle with private business like Sasol in a negative way! Citizens are under the impression that this is a good thing, totally unaware that it is extreme socialistic / communistic behaviour. Support the regime at your peril. Your freedoms will also demish over time like Sasol's now...

  • Soothsayer - 2010-12-15 17:04

    They should also investigate the polyester market for collusion.

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