Johannesburg - Petrochemical giant Sasol's R188m fine for anti-competitive behaviour in its fertiliser division has provided investors with clarity and enables them to "carry on", an analyst said.
"Everybody knew it was on the cards; the clarity given by Sasol affords investors surety - the market reacts well when clarity is provided," BJM Private Client Services' Justin Louw told Fin24.com.
On Wednesday morning, Sasol agreed to pay the R188m penalty to the competition commission as the result of anti-competitive practices in its nitro fertiliser division. In January 2009, the commission started a review of Sasol's compliance with competition law in its operations following a request from Sasol.
The review is an attempt made by Sasol to root out all misdemeanours and occurences of anti-competitve practices taking place within the company's local businesses.
The review uncovered further collusive practices between Sasol, Omnia and Yara, including price-fixing, market allocation and collusive tendering in the supply of a wide range of fertiliser products in the period 1996 to 2004, across most provinces of South Africa, the commission said.
Omnia and Yara continue to deny the allegations of collusive conduct in continuing proceedings before the competition tribunal, the commission said.
Deputy commissioner of the competition commission Thembinkosi Bonakele said the institution had already identified Sasol as partaking in anti-competitve practices five years ago, following a complaint logged by Nutri-Flo, a small blender and distributor of fertiliser.
"Sasol only approached us last year," he said.
It's usually a case of the commission finding companies out for participation in cartel formations or anti-competitive behaviour before they admit guilt, according to Bonakele.
Asked whether the commission had found other areas within the business which were involved in cartel activity, Bonakele said he could not comment at this stage.
Kurt Benn, a senior portfolio manager for Cadiz African Harvest, said in an interview that the R188m fine imposed by the competition commission was a small part of the group's operating profit for 2008. "With Sasol admitting its fault upfront, I think the competition commission took it a little bit easy on them," he said.
For the year to end-June 2008, Sasol reported operating profit of R28bn in its South African energy cluster.
Analysts believe this fine was likely to be the heaviest that Sasol would see for the remainder of the commission's law compliance review, scheduled to finish in the second half of this year.
Sasol was found guilty in November last year for participating in what was termed a 'paraffin mafia' in Europe. Out of nine firms levied fines by the European Commission, Sasol had to pay the highest amount at €318m (R3.8bn at the time).
On Wednesday afternoon, Sasol shares were trading 4.3% higher at R278 apiece, with Benn attributing this to an increase in the oil price. Brent crude was trading at $54.26/barrel.
- Fin24.com