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Spike in cartel investigations - competition commissioner

Aug 31 2017 11:56

Cape Town - Over the past few years, there has been a sharp increase in the number of cartel investigations and prosecutions, Competition Commissioner Tembinkosi Bonakele said on Thursday.

"So far this year, the Cartels Division of the commission has referred 33 cases to the tribunal for adjudication, including the case against 17 banks for collusion in trading of the dollar/rand currency pair," said Bonakele.

"We look forward to receiving the answering papers from the banks so that the matter can proceed to trial," he said at the Competition Law, Economics and Policy Conference at the Gordon Institute of Business Science.

As a further example, he cited the referral against Stuttafords Van Lines for 649 alleged counts of collusive tendering for office furniture removal tenders issued by various government departments and institutions. This is the highest number of collusion charges faced by any single firm in the commission's history.

By Wednesday this week the roll of cases within the Cartels Division stood at 177 cases, 84 of which are prosecutions before the tribunal with the remaining 93 under investigation.

The Market Conduct Division initiated three investigations and referred three alleged abuse of dominance cases to the tribunal for adjudication. As at the end of the 2016/17 financial year, the Mergers and Acquisitions Division received 418 merger notifications - up from 391. The commission also received 205 complaints from members of the public.

Dawn raids   

The Cartels Division conducted dawn raids against fresh produce agents, red meat suppliers and fire control and protection services sectors. The fire hydrant case saw the commission simultaneously raiding 25 premises, breaking yet another record.
    
The Market Conduct Division referred a case against Afrimat for allegedly charging excessive prices for the supply of clinker ash, an input for the manufacture of clinker bricks which are used in the construction of low cost (RDP) housing.

There was also a referral against Westgro and HZPC for allegedly abusing their dominance in the supply of Mondial seed potatoes by entering into an exclusive agreement. This in effect allegedly prevented other potato seed growers from competing with Westgro in the production and sale of the Mondial seed potato variety.

More recently, the commission initiated an abuse of dominance case, including excessive pricing, for the supply of various cancer drugs. 

Mergers

On the mergers front, the highlights for Bonakele were the Anheuser-Busch InBev/SABMiller and Imerys South Africa/Andalusite Resources mergers.

"AB InBev/SABMiller raised a number of competition and public interest issues, addressed by comprehensive competition and public interest conditions covering potential foreclosure, cross shareholding, employment, development of SMMEs and local supply capabilities in beer production," said Bonakele.

"The Imerys South Africa/Andalusite Resources merger was a straightforward two to one merger in the supply of andalusite in South Africa and a near monopoly globally."

Andalusite is used locally and internationally in, among others, the production of steel. The Competition Appeal Court confirmed this prohibition.
 
Bonakele also mentioned what he calls some precedent-setting cases concerning the initiation of investigations and processes about access to the commission’s record by litigants.

A significant case involving cartels, in his view, was against Delatoy Investments, where it was ruled that a parent firm could be held liable for an administrative penalty levied against its subsidiary, under certain circumstances.

The so-called bicycle cartel case was also important, in his view. Here it was ruled that silent participation by firms at a collusive industry meeting attracts liability in the absence of proactive steps to distance oneself from the cartel agreement reached.
 
He also gave the example of the commission's conclusion of an LPG market inquiry in March 2017, which made recommendations largely about opening up markets and aligning the regulatory framework.  

"The market inquiries into private healthcare and retail grocery are expected to be completed during this financial year. In addition, we have initiated market inquiries into public transport and the cost of data," concluded Bonakele. 

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