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20 May 2009 15:15
South African synthetic fuels group Sasol on Wednesday said the Competition Tribunal had confirmed a R251-million settlement agreement between Sasol Nitro, a division of Sasol Chemical Industries, and the Competition Commission relating to transgressions of competition law in the fertiliser and phosphoric acid businesses.
Confirmation of the agreement has the effect of “a full and final settlement and conclusion of all proceedings” between the commission and Sasol Chemical Industries relating to the contraventions.
Sasol Chemical Industries was at the centre of a commission investigation into collusive conduct referred by Nutri-Flo and involving Omnia and Kynoch (now Yara), which allegedly agreed to fix prices and grant discounts for nitrogenous fertiliser.
Another case involved collusion between Sasol and competitor Foskor in the supply of phosphoric acid.
“The remainder of the Nutri-Flo matter and the Profert matter, which deal with allegations of abuse of dominance in the marketplace, form the subject matter of continuing engagement between Sasol and the Competition Commission,” Sasol said in a statement to the JSE.
The original settlement agreement, concluded in early May, imposed a fine of R188-million on Sasol for its involvement in cartel conduct, but the commission said on Tuesday that the fine had been increased to R251-million following the disclosure of additional information by Sasol.
The R251-million represents 8% of the turnover of the Sasol Nitro division.
Sasol has also agreed to cooperate fully with the commission in its prosecution of the remaining respondents in the Nutri-Flo referral.
According to a statement issued by the Competition Tribunal, Sasol admitted that it had contravened the Competition Act by entering into a series of agreements, arrangements and understandings with Omnia and Yara that resulted in Sasol becoming the principal supplier of limestone ammonium nitrate, a key fertiliser product, to wholesale customers.
The tribunal said Sasol also admitted to establishing and participating in the Import Planning Committee, the Export Club and the Nitrogen Balance Committee (NBC), which were used, among other things, to coordinate business practices; to exchange information about production, supply and demand; and to redistribute and swap products by reference to sales target, prevailing market shares and product availability.
From the exchange of this information, the members of the committees were able to derive forecasted market shares.
The NBC was also used to ensure balance of supply and demand.
Here the members of the committees engaged in swaps of various products, in particular in relation to limestone ammonium nitrate, potash and urea.
Members of the committees further communicated estimated landed cost of imported products based upon published international prices and estimated freight costs.
“The settlement is limited to collusive conduct and there are outstanding allegations of abuse of dominance in both matters [Nutri- Flo and the Foskor matter],” said the Competition Tribunal.
“With regard to Nutri-Flo these relate to, among others, excessive pricing and exclusion of competitors by Sasol. In the Foskor case this relates to excessive pricing by Foskor,” it added.
The revised administrative penalty, agreed by Sasol and the Competition Commission, must be paid within 60 days.—I-Net Bridge
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