Johannesburg - Petrochemical giant
Sasol [JSE:SOL] has agreed to divest
five of its fertiliser blending facilities with the exception of its Secunda
plant, the Competition Commission said on Monday.
This follows the conclusion of a
settlement agreement between the Competition Commission and Sasol Chemical Industries (SCI) last
week.
The settlement relates to SCI's
abuse of dominance, exclusionary conduct and price discrimination in the supply of ammonia and derivative
fertiliser products.
The agreement, which finalises the
abuse aspect of the fertiliser case, follows the settlement reached on the collusion part of the case
in which Sasol was fined R250m.
The remaining parties in the collusion
case, Kynoch/Yara and Omnia, are defending the case in the tribunal.
The Competition Commission said the
application for the confirmation of this settlement agreement by the Competition Tribunal was
set to be heard on July 14.
In terms of the agreement, Sasol
has 12 months from the confirmation of the settlement by the Competition Tribunal to divest from
the fertiliser assets.
Sasol has agreed to sell ammonium
nitrate-based fertilisers on an ex-works basis from its plants at Sasolburg and Secunda and depots
within 100km of them.
It has also committed not to
differentiate in its pricing of ammonium nitrate-based fertilisers, other than on standard commercial terms
such as volume and off-take commitments.
"The parties have also agreed
that SCI will within 25 months from confirmation of the agreement, cease all importation of ammonia, other
than for internal use into the Republic of South Africa other than those imports on
behalf of third parties that may be occasioned due to supply and logistical disruptions
and plant maintenance shutdowns," said the commission.
While this settlement does not
include an administrative penalty, the commission said it feels the structural and behavioural remedies
agreed in this settlement, together with addressing cartel conduct that was the subject of
previous settlement with Sasol, will effectively address competition concerns in the
fertiliser market.
"The pricing and divestiture
commitments will remove Sasol's incentive and ability to exclude competitors in fertiliser blending and
retailing," it said.
If confirmed, this will be the
first structural remedy that has been reached in a referred enforcement case.
Competition commissioner Shan
Ramburuth said the settlement would ensure that SCI does not exclude its smaller rivals; it also means more
participation in the industry and better prices for farmers.
"Fertiliser is a key input in
the production of field crops accounting for a significant portion of the costs of production," said Ramburuth.
- I-Net Bridge