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Prominent brick manufacturer and supplier, Corobrik, has expressed surprise that the Competition Commission believes agreements with five rival firms constitutes a contravention of the Competition Act.

Dirk Meyer, the managing director of Corobrik, said yesterday that they took the commission’s referral of the firm to the Competition Tribunal “very seriously”. But he said he was “most surprised” to learn that the commission believed these agreements generated competition law concerns.

The referral followed an investigation launched by the commission in April this year against Corobrik, Era Bricks, Eston Brick and Tile, De Hoop Brickfields, Clay Industry and Kopano Brickworks for allegedly contravening the Competition Act.

The commission alleges that Corobrik’s agreements with these firms resulted in price fixing and/or the division of markets in the manufacturing and supply of bricks, pavers and blocks of clay and concrete.

Corobrik believed its agreements with these firms were “both legitimate and defensible in terms of the Competition Act and that the commission’s concerns are attributable to a misunderstanding of the commercial arrangements in question and the market generally”.

AGREEMENTS

He stressed that the commission’s referral of the case to the tribunal did not constitute a finding against Corobrik and simply reflected the commission’s views based on its understanding of the agreements.

“The question of whether or not the conduct actually amounts to a contravention of the Competition Act remains to be adjudicated by the tribunal.

“Consequently, Corobrik is looking forward to the opportunity to clear its name and is confident that a thorough ventilation of the relevant facts and circumstances before the tribunal will set the record straight,” he said.

Meyer added that Corobrik would like to assure its employees, suppliers, customers and business partners that while this process was likely to take some time to finalise, the company’s operations would continue unaffected and it remained committed to all of its stakeholders.

Sipho Ngwema, the head of communications at the commission, said this week that Corobrik allegedly entered into separate bilateral agreements with each of the other five companies in terms of which they agreed to divide up the market by allocating specific products and/or customers in contravention of the Competition Act. Corobrik and Era Bricks allegedly agreed to fix prices at which they sold bricks, pavers and blocks, also in contravention of the Competition Act, he said.

NO DIRECT SUPPLY

Ngwema said Corobrik and Era Bricks allegedly also concluded a memorandum of agreement.

In terms of that agreement, they allegedly agreed that Era Bricks would not supply its products directly to customers in competition with Corobrik but instead would sell directly to Corobrik, which would then sell to customers in the open market.

It was further allegedly agreed that Era Bricks would not manufacture or sell any bricks other than the types it was manufacturing and selling to Corobrik and it would not manufacture or sell any competitive product capable of being used in the brick industry in substitution for bricks.

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In terms of the agreement, it was also alleged that it was agreed that if Era Bricks had excess products, it would not to sell the excess products at prices that were lower than those charged by Corobrik.

Ngwema said Corobrik allegedly also concluded separate bilateral distributorship agreements individually with Eston Brick, Clay Industry, De Hoop and Kopano.

In terms of these distributorship agreements, Eston Brick, Clay Industry, De Hoop and Kopano allegedly agreed with Corobrik that they would not supply their respective products directly to customers in competition with Corobrik.

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