The Competition Commission has referred to the Competition Tribunal for confirmation a consent agreement with corrugated box packaging company Mpact in respect of alleged acts of collusion and prior implementation of merger acquisitions in contravention of the Competition Act.
In terms of the agreement, Mpact has undertaken to pay a penalty of R7-million. In a separate statement on Thursday, Mpact advised that the settlement agreement is comprehensive in that it covers the failure to obtain the prior approval of the competition authorities as well as any potential concerns, which the commission may have regarding the relationship between Mpact and the sheet plants concerned.
It added that, "at all relevant times, Mpact and the sheet plants were principally in a supplier-customer relationship and Mpact had a significant minority shareholding in the sheet plants concerned". As such, Mpact noted that it has "always maintained, contrary to the commission’s characterisation thereof, that the relationship between it and the entities in which it had shareholdings has not been collusive in nature".
The settlement agreement, however, resolves all potential concerns in this regard, the company stated.
The agreement follows an investigation initiated by the commissioner in May 2016 after Mpact, through its indirectly wholly-owned subsidiary Rebel Packaging, acquired control of several entities, allegedly without approval from the commission.
In terms of the Competition Act, these acquisitions were notifiable mergers, meaning that they were supposed to be reported to the commission prior to implementation.
The commission says Mpact has since admitted that this conduct contravened the Act.
In the course of its investigation, the commission also found that Mpact, together with a number of smaller entities, was allegedly involved in collusive conduct relating to price fixing, collusive tendering and division of markets in the market for the manufacture and supply of corrugated packaging products.
The commission also found that, after the mergers, Mpact, through its involvement as shareholder and supplier to the sheet plants over which it gained control, allegedly had insight into their costs and pricing, as well as the specific customers whom they were targeting.
Mpact also had a representative who sat on the board of directors of those sheet plants, the commission alleged.
The commission referred the matter to the tribunal in April 2019.
It added that this settlement resolved all issues in relation to the prior implementation of Mpact’s merger acquisitions and its alleged acts of collusion in contravention of the Act.