Tribunal approves Engen, Shell fines

Johannesburg - The Competition Tribunal has given its stamp of approval to settlement agreements reached between the Competition Commission and Engen Petroleum and Shell South Arica Marketing for price-fixing.

The two oil companies admitted to having fixed the price of bitumen with other oil firms by collectively determining and agreeing on pricing principles, including a starting reference price and monthly price adjustment mechanism.

Engen has agreed to pay a penalty of R28.8m and Shell has agreed to pay almost R26.3m.

The settlement agreements follow the commission's referral in March 2010 of its findings against the Southern Africa Bitumen Association (Sabita) and seven major oil companies - Chevron SA, Engen, Shell, Total SA, Masana Petroleum Solutions, Sasol and Tosas - to the tribunal for adjudication.

The commission did not seek a penalty from Sasol and its subsidiary Tosas, which were granted conditional immunity following the leniency application filed with the commission by Sasol on January 12 2009.

The commission previously concluded settlement agreements with Masana and Sabita in 2010 and 2011, respectively.

This case was initiated following information received from Sasol and its subsidiary Tosas in the leniency application. In its investigation the commission found that the oil companies entered into an agreement and engaged in collusive conduct from about 2000 until at least December 2009.

The conduct included the exchange of competitively sensitive information relating to the pricing of bitumen and associated products, and the use of an agreed pricing formula to set the wholesale list selling price of bitumen.

This was facilitated through meetings convened by Sabita, as well as correspondence through Sabita and direct communication between oil companies.

Bitumen is one of the byproducts from crude oil refining. Bitumen and modified bitumen products are used to surface and rehabilitate roads, as waterproofing products and to suppress dust. The end customer of bitumen is mainly government road agencies and municipalities.