The Competition Tribunal turned its focus back to the case of alleged cartel conduct in the cement industry on Thursday, with a judgment in the case against KwaZulu-Natal-based Natal Portland Cement (NPC) Cimpor expected to be announced by June.
The Competition Commission in 2008 launched an investigation into alleged anticompetitive practices in the cement industry, alleging that AfriSam, Pretoria Portland Cement (PPC), NPC and Lafarge had engaged in cartel conduct between 1995 and 2009.
The commission argued that AfriSam, Lafarge and PPC had, under the terms of a 1995 agreement, agreed to share the market, by allocating each producer the market share that it held before 1996, when a lawful cement cartel existed.
During this period, AfriSam had a share of between 35% and 36%, while Lafarge’s share was between 22% and 23%, and PPC had between 42% and 43% market share.
Until 2002, the three companies were equal shareholders in NPC, with each owning one-third.
The commission granted PPC conditional immunity, while AfriSam and Lafarge paid fines of R128.8-million and R148.7-million, respectively.
As part of their consent agreements with the commission, AfriSam and Lafarge pleaded guilty to contravening the Competition Act.
To date, the NPC has denied allegations of colluding with the three other companies within the confines of the alleged cartel.
During the first day of the hearing, on Thursday, the commission outlined that the four cement producers had also allegedly submitted sales information to the Cement and Concrete Institute (C&CI), which published that information as a mechanism for maintaining the arrangement.
According to Sephaku Cement CEO Pieter Fourie’s witness statement on Thursday, the four companies agreed to exchange information through the auditors appointed by the C&CI and, in return, received the aggregated tables from the C&CI. This arrangement made it possible for them to monitor and maintain market shares and the pricing structures for different types of cement products.
Fourie previously worked for Lafarge.
The commission further claimed that NPC had been party to the anticompetitive arrangements and meetings, following a two-day meeting held at the Selborne Golf Estate near Port Shepstone on the south coast in 1998.
Here, the commission alleged, members of the cartel agreed to collude and divide up cement markets in South Africa, Lesotho, Botswana, Namibia and Swaziland.
Fourie on Thursday confirmed that discussions between the companies led to an agreement to cartelise the industry by adopting a strategy that enabled cooperation between the four competing companies.
However, NPC-Cimpor MD Pieter Strauss, who gave his witness statement on Friday, said that, while he was present at some of the meetings, he was unaware of all of the contents being discussed.
As a result, Strauss claimed that he had “no understanding of market share” and said that NPC did not receive any instructions to withhold supply to certain areas to uphold the market share agreement between the cartel members.
The commission disputed Strauss’ claims, stating that he had been aware of the discussions as a result of his position as Blue Circle Cement head prior to his appointment as NPC MD in 1998.
Blue Circle Cement has since been acquired by Lafarge.
Meanwhile, Fourie also said there had been an agreement that NPC would be allowed to continue running at full capacity. However, this was in contravention of the global cement rules, considering that NPC’s full capacity run stopped new entrants from entering the market during this period.
Strauss, however, argued that he had “never heard of the global cement rules” and that this was not brought to his attention.
The commission is seeking a maximum penalty of 10% of NPC’s annual turnover for its alleged involvement in the contravention of the Competition Act.
The last day of the tribunal’s hearing will be on Monday.
The tribunal’s decision is expected by June, once all legal processes have been completed.