The Competition Tribunal on Wednesday commended the courage and integrity shown by a witness in a hearing into a plastic pipes cartel‚ Michelle Harding‚ in facing up to what it called an industry dominated for decades by illicit cartel practices and making it too difficult for them to continue operating in the way they did.
"Enforcement against cartels requires more Hardings who are willing to take a moral stand and‚ as she put it in her testimony‚ 'stop the cancer'‚" the Tribunal said in its ruling.
The Tribunal found that MacNeil Agencies‚ Amitech South Africa‚ Andrag‚ and Petzetakis Africa had colluded to fix prices in contravention of the Competition Act. Amitech South Africa and Petzetakis Africa were also found to have engaged in market allocation and collusive tendering in respect of their plastic pipe products. The Tribunal dismissed the case against Gazelle Plastics and Gazelle Engineering.
Using its six-step approach to determining penalties‚ the Tribunal imposed a penalty of R2 million on MacNeil Agencies and an R11.1 million fine on Amitech South Africa.
The Tribunal found Andrag's involvement to be limited in that its representative attended one meeting and‚ prior to the meeting‚ was unaware of the collusive purpose of the meeting. Nevertheless even when the purpose became clear‚ Andrag's representative did not take positive steps to exclude himself from the discussion. Accordingly‚ the Tribunal found that Andrag had indeed contravened the Competition Act but imposed no penalty on it.
The testimony of Michelle Harding drew an 80% discount for Petzetakis‚ resulting in a penalty of R9.92 million.
"It is important to signal to the business community that the public disavowal of cartel arrangements will not go unrecognised when it comes to the imposition of a sanction" the Tribunal said in this regard.
The Tribunal's decision sets out the sequence of events that led to Michelle Harding's testimony. As the managing director of Petzetakis Africa (Pty) Ltd‚ she became increasingly uncomfortable with the collusive practices she had witnessed in the plastic pipes industry. Consequently she arranged "what turned out to be the most important of the meetings referred to in this case." She invited several cartel members to a breakfast meeting and told them that Petzetakis and its subsidiaries would no longer participate in any collusive activities.
She did the same within her own firm and took the necessary steps to ensure this outcome. The Tribunal remarked that Harding's testimony "demonstrated that redemption is possible even in the most unlikely environments - an industry riddled with collusive practices‚ betrayal and deception".
The Tribunal's decision follows a hearing that took place on various days between 13 September 2010 and 20 April 2011 into an alleged plastic pipes cartel. The Competition Commission referred the complaint to the Tribunal for adjudication in February 2009 after it found that DPI Plastics‚ Marley Pipe Systems‚ Petzetakis Africa‚ Swan Plastics‚ Amitech South Africa‚ Flo-Tek Pipes & Irrigation‚ Andrag‚ Gazelle Plastics‚ Gazelle Engineering and MacNeil Agencies had meetings in which they fixed prices‚ rigged tenders and divided markets by allocating contracts and customers. According to the Commission‚ the cartel members met over a long period of time before the Competition Act came into force and the meetings continued until 2007. One witness testified in the Tribunal hearing that when he joined the industry in 1969 the cartel was known to be in existence.
The respondents comprised manufacturers and suppliers of pipe products which collectively enjoyed the major share of the market. The pipe products were used for plumbing and in the civil engineering‚ mining and agricultural sectors in South Africa.
The Competition Commission did not seek any penalty against the first respondent‚ DPI Plastics‚ because it received immunity from prosecution in terms of the Commission's corporate leniency policy. Marley Pipe Systems‚ Swan Plastics and Flo-Tek Pipes & Irrigation have since settled with the Commission‚ paying penalties of approximately R 31 million‚ R 7.6 million and R 5 million respectively. -I-Net Bridge