File picture: Chris Collingridge/Independent Media

JOHANNESBURG - Power cable supplier Alvern Cables will have to pay a R4.7million fine for contraventions of the Competition Act, including price fixing and division of markets.

This follows the Competition Tribunal last week confirming the penalty, which constitutes 5percent of Alvern’s total annual turnover for its 2010 financial year. It also follows the Competition Commission in March this year referring to the tribunal its findings of cartel conduct against Alvern Cables, South Ocean Electric Wire Company (SOEW), Tulisa Cables and Aberdare Cables.

The tribunal in June confirmed a settlement agreement in terms of which SOEW agreed to pay a R13.36m fine. Aberdare Cables was the leniency applicant in the case and has been granted conditional leniency from prosecution for this contravention.

The tribunal has not yet confirmed a settlement proposed by the commission for the Association of Electric Cable Manufacturers of South Africa (AECMSA) in terms of which the association would pay a fine of R14853.67. The commission’s investigation into the conduct of the members of AECMSA found that the power cable manufacturers had fixed the selling of power cables through indices that were used in price adjustment formulas of raw material input costs by its members.

These firms implicated in the cartel are all suppliers of power cables, including products such as house wire, surface twin and earth wire that are generally made from copper, aluminium, polyethylene, steel tape and galvanised wire.

These power cables are used to distribute electricity to residential and commercial users.

Investigation

The commission initiated the investigation in March 2010 and conducted a search-and-seizure operation against the firms for possible price fixing and market allocation contraventions in May 2010. The investigation found that between 2001 to at least 2010, the firms directly or indirectly fixed the selling prices of power cables to wholesalers, distributors and original equipment manufacturers.

Affected customers included the Voltex Group, which is part of the Bidvest Group; ARB Holdings; Universal Cables; Trinity Cables; Powermac; Paragons; South Atlantic Cables; and Electrobase. The investigation also found that from about 2001 to at least end 2007, Aberdare agreed with SOEW and Alvern to divide markets by allocating customers.

It was alleged the firms had regular meetings and telephone conversations to discuss power cable price adjustments when there was a significant change in the price of input materials which fluctuated monthly.

- BUSINESS REPORT