The Competition Commission has reached a settlement agreement with Sasol Chemical Industries (SCI), finalising the abuse aspect of the fertiliser case arising from complaints by Nutri-Flo and Profert.
“This follows the settlement reached with Sasol on the collusion part of the case in which Sasol was fined R250-million,” the commission said in a statement on Monday.
It said that it had earlier filed an application for the confirmation of the settlement agreement by the Competition Tribunal.
The remaining parties in the collusion case, Kynoch/Yara and Omnia, were defending the case in the tribunal, the commission added.
The tribunal would hear the application regarding SCI on July 14.
The settlement related to SCI’s abuse of dominance, exclusionary conduct and price discrimination in the supply of ammonia and derivative fertiliser products.
In terms of the agreement, within 12 months after the confirmation of the settlement by the tribunal, SCI had to divest five of its fertiliser blending facilities located across the country, with the exception of its Secunda plant.
It also had to sell ammonium nitrate-based fertilisers on an ex-works basis from its plants at Sasolburg and Secunda and depots within 100km of them.
SCI also had to commit not to differentiate in its pricing of ammonium nitrate-based fertilisers, other than on standard commercial terms such as volume and off-take commitments, which had to be transparent and available to all customers.
The commission asked SCI to house the ammonia plants and business operations relating thereto as a business unit separate from Sasol Nitro and with separate audited books of account.
The parties agreed that SCI would within 25 months from confirmation of the agreement cease all importation of ammonia, other than for internal use, into South Africa.
“This settlement does not include an administrative penalty,” the commission said, as it was of the view that the structural and behavioural remedies agreed in the settlement, together with addressing cartel conduct that was the subject of previous settlement with Sasol, would effectively address competition concerns in the fertiliser market.
The pricing and divestiture commitments would remove Sasol’s incentive and ability to exclude competitors in fertiliser blending and retailing.
If confirmed, this would be the first structural remedy reached in a referred enforcement case.
Limiting impact of staff changes
In a separate statement, Sasol confirmed that SCI had reached a settlement with the commission regarding allegations of abuse of dominance in its fertiliser businesses.
It said that about 50 permanent SCI employees — as well as about 90 commission-based agents — would be affected by the restructuring requested by the commission.
“Over the implementation period, Sasol will work with the affected parties to, as far as possible, limit the impact of the changes on the staff.”
Sasol ChemCity, Sasol’s business incubator, would help interested parties in the development of business opportunities that might arise from the restructuring.
“Not only will this settlement see us restructure our fertiliser business within Sasol, we believe it will open the downstream fertiliser industry to more players, encouraging competition and potentially create new distribution business opportunities, as this sector redesigns itself,” Sasol spokesperson Marius Brand said.
He said that the coming changes would create several new opportunities for SCI to improve its offering to the end customer.
“We remain committed to the agriculture industry and the competitiveness of inputs to that industry,” he said. — Sapa