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South Africa’s Competition Commission has referred a case of alleged indirect price fixing and market division against Natal Portland Cement Cimpor (NPC) to the Competition Tribunal for prosecution.
The referral followed the commission’s investigation, between 2008 and 2012, of alleged collusive conduct in the cement sector against the four main cement producers, NPC, Pretoria Portland Cement (PPC), Lafarge Industries South Africa and AfriSam Consortium.
PPC had been granted conditional leniency in terms of the commission’s corporate leniency policy, while AfriSam had settled with the commission and agreed to pay an administrative penalty of R128.85-million, representing 3% of its yearly turnover for cement sales in the Southern African Customs Union (Sacu) region in 2010.
Lafarge had also settled with the commission and agreed to pay an administrative penalty of R148.72-million, representing 6% of its yearly turnover for cement sales in the Sacu region in 2010.
In its investigation, the commission found that the four cement producers had agreed to collude and to divide the cement market by allocating market shares and indirectly fixing the price of cement prior the end of the legal cartel in 1996. It said the producers subsequently reinforced these collusive arrangements through a series of other agreements, to which NPC’s representatives were party to, including an agreement to progressively exchange competitively sensitive sales data through the Concrete and Cement Institute of South Africa.
The commission alleged that, in terms of the cartel agreement, concluded in Port Shepstone in 1998 and reinforced in subsequent agreements, market shares and territories were allocated to members of the cartel, to which all members agreed to adhere. NPC, which before 2002 was jointly owned by AfriSam, PPC and Lafarge, was said to have been party to several anticompetitive arrangements and meetings.
The commission was seeking a maximum penalty of 10% of NPC’s yearly turnover and a tribunal order that NPC contravened the Competition Act.
“By maintaining and monitoring market shares, competitors indirectly restrain price competition. This anticompetitive conduct defeats the incentives to compete fairly in the market, effectively denying consumers more competitive prices, better service and differentiation of products to make them more attractive.
“The commission’s recent study also found that the cement cartel cost the South African economy billions in price overcharges,” said Commissioner Tembinkosi Bonakele.