The Competition Commission has alleged that the six major fuel companies had been fixing the price of diesel and dividing the market in contravention of the Competition Act.
Yesterday the commission announced that it had referred a case against Chevron, Engen, Shell, Total, Sasol and BP to the Competition Tribunal for adjudication. It also hinted at possible referrals of anti-competitive charges in other product categories in the industry.
The commission’s action extends to the SA Petroleum Industry Association (Sapia), which says “it represents the collective interests of its members”, who are Chevron, Engen, Shell, Total, Sasol and BP.
The commission added that the referral to the tribunal followed “wide-ranging investigations by the commission into possible collusive conduct in liquid fuels”.
The investigation started in January 2009 based on information received “from various sources”. The investigation revealed evidence of collusive conduct “through extensive exchanges of commercially sensitive information by the respondent oil companies”. The exchanges started in the late 1980s and, with effect from 2005, were largely achieved through Sapia.
Yesterday, Tembinkosi Bonakele, the deputy commissioner of the Competition Commision, acknowledged that Sapia members had collective interests in particular in dealing with infrastructure-related issues and transporting fuel from the coast to inland regions. “But part of the problem is how that collective interest has been pushed too far and, I believe, has crossed the line.”
Bonakele told Business Report that a large part of the discussions before the Competition Tribunal was likely to focus on exactly where that “line” was. “There is an accepted need for co-ordination in this industry, but that is no justification for collusion.”
Some years ago, Sapia was granted an “industry stability exemption”, which allows its members to communicate on issues related to the use of pipelines to transport fuel.
Bonakele said the exemption recognised the logistical challenges facing the industry but he added: “[The exemption] makes very clear what can and cannot be communicated.”
Yesterday Sapia could not comment on the commission’s referral. Executive director Fanie Tshifularo told Business Report that he would not be in a position to comment until he got a mandate from members.
A Sasol spokesman said yesterday the company was awaiting a copy of the referral to study it in detail. The company had begun engaging with the commission in 2008 as part of its “Competition Law compliance review” and said this had preceded the commission’s investigation. Sasol concluded its review in 2010 and yesterday said: “There was no evidence to support the allegations.”
In its statement, the commission noted that while the diesel price was not regulated, there was a maximum “wholesale list selling price” (WLSP) published by the Department of Energy. “The oil companies used the WLSP as their list price, and their conduct prevented competitive discounting off this benchmark.”