May 08, 2012
RMS, Vulcania fined in mesh wire cartel caseBack
Africa|Murray & Roberts Steel|Reinforcing Mesh Solutions|Africa|Steel|Vulcania
© Reuse this
The Competition Commission said on Tuesday it initiated an investigation in 2008, when BRC Mesh Reinforcing, through its parent company Murray & Roberts Steel, admitted its involvement in the cartel, which also included RMS, Vulcania and Aveng Africa (trading as Steeldale Mesch). Murray & Roberts was granted conditional immunity from prosecution, provided it cooperated with the commission during its investigation.
In the tribunal’s hearing, it emerged that, after the cartel discussed and agreed on prices derived from a set formula at industry meetings, industry association the South African Fabric Association circulated recommended price lists for adoption by members. This allowed the companies to simultaneously pass on input cost increases to their customers by providing a common mechanism for deriving the final price.
Vulcania, which denied that its attendance at the meetings amounted to an agreement to join the cartel, was found to have participated in the cartel from January 2006 until January 2008.
Vulcania stated that it only attended meetings to ensure continued supply from its competitors by way of making them believe the firm was part of the cartel. However, the tribunal found that whether Vulcania’s participation was ‘real or a sham’, Vulcania benefited from the cartel as it amounted to protection from potential competition.
The commission said RMS, which was found to be involved in the cartel from January 2004 until January 2008, admitted liability, but argued the extent of its involvement in the cartel and also whether a penalty could be competently imposed upon it and if it could, what an appropriate penalty was.
RMS, further, denied the commissions claim that the company undertook organisational restructuring before the cartel was exposed to avoid penalties, adding that the change was for commercial reasons and, at the time, it was not aware of any legal action against it.
RMS argued that it had no turnover in the relevant financial year and therefore, no penalty could be levied on it. The Tribunal, however, determined the appropriate penalty based on the “earliest preceding year of normal turnover”.
The tribunal, for the first time, based its determination of the penalties on a new six-step approach under the European Union 2006 penalty guidelines, as with an earlier Competition Appeal Court finding in a Southern Pipeline Contractors case in 2011.
Aveng settled the case with the commission in April 2011 and paid an administrative penalty.
Edited by: Mariaan Webb© Reuse this Comment Guidelines
Other Competition Policy News
Updated 37 minutes ago World Trade Organisation (WTO) director-general Roberto Azevêdo assured the organisation’s General Council on Thursday that trade will continue to be a focus in the post-2015 Development Agenda, with a primary goal being the achievement of a “significant”...
Updated 53 minutes ago Global revenues from solar energy operations could double from $59.84-billion in 2013 to $137-billion in 2020, new analysis from Frost & Sullivan shows. The consultancy’s ‘Global Solar Power Market’ report says the total global installed solar photovoltaic (PV)...
Updated 1 hour 8 minutes ago The biennial Sasol Solar Challenge will kick off on September 27, in Pretoria, and end in Cape Town, on October 4. Fourteen teams will take part, of which eight are local, says race project manager Annalie van Vuuren.
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...