Competition Commission update – R37m fine, chemical & brick cartels

14 Jul 2017

Two chemical companies involved in manufacturing and supplying chemicals have been fined R37m for cartel conduct. Investchem (Pty) Ltd (Investchem) and Akulu Marchon (Pty) Ltd (Akulu) have agreed to pay fines after admitting to price fixing and dividing markets. Investchem is required to pay a penalty of R23 423 155.00 and Akulu a penalty of R13 905 600.40 in terms their respective settlement agreements with the Competition Commission.

The two companies manufacture and supply a range of surfactants (compounds that lower the surface tension between two liquids) that act as wetting agents, emulsifiers, foaming agents and dispersants, which are widely used for making detergents, cosmetics and toiletries.

A search and seizure operation conducted by the Commission in December 2014 at the premises of both companies uncovered agreements which are in contravention of section 4(1)(b)(i) and (ii) of the Competition Act. Amongst others, the companies, which are competitors, agreed to the following:

• Between 2003 and 2013 Investchem and Akulu agreed to fix prices for surfactants;
• Investchem and Akulu divided the market by agreeing not pursue each other’s customers

Both companies have now agreed to cease all cartel conduct and to treat their respective customers fairly and without discrimination.

Good Hope Brick (Pty) Ltd t/a Cape Brick, the third and final brick company in the Western Cape brick cartel, has settled after admitting to cartel conduct. The company has admitted to price fixing and customer allocation in the masonry brick market in the Western Cape, conduct which  is in contravention of the Competition Act.

The company has agreed to pay a fine of R300 000.00 and to implement a competition law compliance programme, as per the terms and conditions of a settlement agreement with the Commission.

The Western Cape Brick Cartel matter dates back to 2012 when the commission launched an investigation against Cape Brick, Columbia DBL (Pty) Ltd (Columbia DBL) and Inca Concrete Products (Inca), all of whom are competitors in the brick manufacturing market. The Commission revealed that the three companies had agreed to fix prices and to allocate customers of concrete and masonry products to one another. It was found that the companies had drawn up, exchanged, and updated customer lists on a regular basis, wherein they would indicate their preferred customers and allocate such customers between them. In order to retain the allocated customers, they agreed on the prices to be quoted to each of them.

Columbia DBL was granted conditional immunity in terms of the Commission’s Corporate Leniency Policy in 2013, but was subsequently liquidated that same year. Inca settled its conduct with the Commission in November 2014, and has paid a fine of R800 000.00.

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)