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JSE
THEE
THEE - The Competition Commission - Commission refers and settles collusion case
in the polymers market
Media Release
12 August 2010
Commission refers and settles collusion case in the polymers market
The Competition Commission today referred complaints of collusion and excessive
pricing in the polymers market against Sasol Chemical Industries Limited
("Sasol") and Safripol (Pty) Ltd to the Tribunal for adjudication.
Simultaneously, it also reached a settlement with Safripol in which it admits
that the supply agreement between Sasol and Safripol and its implementation
amounted to price fixing in contravention of the Act. Safripol agreed to pay a
penalty of R16, 5 million which represents 1, 5% of its total annual turnover
derived from polypropylene products.
The Commission initiated the investigation in 2007 following concerns raised by
the Department of Trade and Industry (dti) about polymer pricing and its
negative effect on diversified growth and employment in manufacturing.
The Commission found that Sasol had charged excessive prices for polypropylene
and propylene to its local customers in line with import parity pricing.
Further, that Sasol and Safripol engaged in collusive conduct as a result of the
implementation of the supply agreement including the operation of the pricing
formula and the exchange of information relating to the pricing of
polypropylene.
Sasol is the dominant supplier of propylene, for its own use and that of
Safripol. It is also the major supplier of polypropylene to the South African
market along with Safripol. The Commission found that South Africa is also a
major exporter of polypropylene reflecting its competitive position in this
product. One would therefore have expected pricing to local customers to be on
the same basis as export prices, however, this is not the case.
Polypropylene, a plastics polymer is used by plastics converters to manufacture
a wide range of products. The competitiveness of local manufacturers in these
relatively labour intensive activities depends on competitively priced
polypropylene input.
"This is an important case as it goes to the heart of government`s objective to
support employment creation and growth in downstream manufacturing," said
Commissioner Shan Ramburuth.
The Commission is seeking a penalty of 10% of Sasol`s annual turnover for each
of these contraventions.
ENDS
Further Info:
Oupa Bodibe, Manager: Advocacy & Stakeholder Relations
012 394 3267/ 082 563 6970/ oupab@compcom.co.za
Molebogeng Taunyane, Coordinator: External Communications
012 394 3289/ 082 646 8663/ molebogengt@compcom.co.za
Date: 12/08/2010 11:33:02 Produced by the JSE SENS Department.
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