Watchdog fingers oil companies

The Competition Commission said on Thursday it has referred its findings of price fixing in the supply of bitumen by major oil companies to the Tribunal.

The companies included Chevron SA, Engen, Shell SA, Total SA, Masana Petroleum Solutions, the Southern African Bitumen Association (Sabita), Sasol and Tosas.

"Bitumen is a residual fraction of crude oil... bitumen and modified bitumen products are mainly used in road construction to tar and rehabilitate roads, which is mainly sold to government entities," the Commission said.

The investigation was initiated on January 12 2009, following an application for leniency by Sasol and its subsidiary Tosas.

"In its application Sasol admitted that together with its subsidiary, Tosas, it had colluded with its competitors and was granted conditional immunity from prosecution provided it co-operates with the Commission in its investigation and prosecution."

The Commission said it had asked the Tribunal to impose an administrative penalty of 10% on each of the firms involved, except for Sasol and Tosas.

"Settlement terms have been agreed in principle with Masana whereby it (Masana) admits guilt and will pay an administrative penalty of R13m.

"The settlement agreement will be referred to the Tribunal for confirmation shortly."

The Commission found that the respondents engaged in collusive conduct from around 2000 until at least December 2009.

"The respondents collectively determined and agreed on pricing principles, including a starting reference price and monthly price adjustment mechanism.

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

The Commission said the conduct resulted in final customers being charged prices which were not competitively determined. "All of the respondents compete in the supply of bitumen and bituminous products.

"They are also suppliers of a range of other petroleum products." Commissioner Shan Ramburuth said the uncovering of the cartel was "another important step in the Commission's work in addressing anti-competitive conduct affecting infrastructure development".

- Sapa