The Competition Tribunal has imposed a R10.2-milllion penalty on Enviroserv, after investigations found that Enviroserv had colluded with Wasteman to set the downstream price in the market for waste transportation services.
The tribunal found that the two firms used their upstream joint venture, the Vissershok landfill site, as a forum to reach agreement.
The relationship between Enviroserv and Wasteman was often acrimonious, a circumstance which partly led to Wasteman’s decision to approach the Competition Commission and seek leniency for its part in the collusion.
Waste transportation companies such as these respondents collect waste from their customers and transport it to landfill sites to be disposed of. Landfill sites thus operate in a vertical relationship with waste transportation companies.
The commission referred a complaint to the tribunal in February 2017, alleging that Enviroserv and Wasteman had fixed prices for waste transportation services from 1998 until November 2013 and divided markets by allocating customers between 2005 and 2012.
While the tribunal largely found in favour of the commission regarding its price fixing allegation, the commission’s complaint in respect of market allocation was dismissed.
The tribunal found that Vissershok charged third-party waste transportation companies about 43% more than they charged Enviroserv and Wasteman to receive waste.
This meant that third-party waste transportation firms were placed at a significant disadvantage to these two companies.
Enviroserv put up various arguments for the existence of this downstream price, one of which was that it was functional to the joint venture as it incentivised the firms to compete downstream.
However, the tribunal disagreed and was of the view that, at all times, the decision to fix the downstream price was not the behaviour of firms in a vertical relationship but was rather the conduct of two firms competing directly with each other.