The Competition Tribunal said yesterday it will give its decision in due course as to whether to confirm or not the settlement agreement by consumer goods company Unilever South Africa on its possible market division case.
This is after Unilever and the Competition Commission reached a settlement agreement following the Commission in 2017 referring a case against Unilever and Sime Darby Hudson Knight for prosecution for possible division of markets between 2004 and 2013.
According to the commission, in its investigation, it found the two companies entered into a sale of business agreement which contained a non-compete clause that restricted each of them to produce and supply certain pack sizes of margarine and edible oils in possible contravention of the Competition Act.
Sime Darby settled the matter with the Commission in July 2016.
The Commission said in terms of Unilever’s settlement agreement, Unilever had agreed to pay an administrative penalty of R16 million without an admission of liability.
“As part of the settlement agreement, Unilever has agreed to a range of initiatives including that it will increase the aggregate annual value of its procurement of products and services from local entities by a minimum of R340m for over a period of four years.
“Additionally, the consumer goods company has agreed to donate hygiene, disinfectant, and oral care products to the value of R3m to no fewer than 18 780 public schools over a period of five years. Furthermore, Unilever will establish an enterprise and supplier development fund to the value of R40m,” it said.
The Commission said this fund would provide interest-free business loans to qualifying black-owned entities in the manufacturing, logistics, and wholesale industries in South Africa that meet Unilever’s credit and selection criteria.
“This includes black-owned manufacturing companies requiring start-up funds to enter the logistics, wholesale, and distribution industries,” it said.
On Tuesday, the Commission made submissions to the Tribunal on how it and Unilever reached the agreement.
Representing the Commission, Makgale Mohlala said the R16m was calculated by using Unilever’s annual turnover in South Africa for the 2022 financial year.
“We used Unilever’s annual turnover because the unit that was involved in this conduct, it’s no longer part of Unilever. The only turnover available at our disposal was of Unilever.
“The penalty amounts to 0.08% of Unilever’s R20 billion annual turnover in South Africa for the year 2022,” he said.
Mohlala said the amount was a negotiated figure, but not a penalty-imposed sum.
“In the negotiations as always, it’s give and take, but what happened here is Unilever made an offer to settle. I think the amount was substantially low, about R5m, we counter-offered at about R50m, until we settled with R16m. We thought that R16m is not a bad figure to arrive at after those discussions,” he said.
Mohlala said they would like to bring finality to the matter.
“We submit that the terms of the agreement are not shockingly inappropriate, which is the task set by the Competition Commission settlement agreement,“ he said.
On its submissions, Unilever represented by Lerisha Naidu, agreed with the Commission on how the settlement was reached but added: “On the basis of the dispute between the parties, we do not feel that this is an infringement of the Competition Act or necessitating an admission of liability and that did inform the computation of the settlement figure.”
Naidu said the business in question was referred to in Unilever as a full solutions business and as indicated by Mohlala that it has been disposed of.
“The total turnover that was derived by the business for the year preceding the cessation of the conduct of the 2011 financial year was R101m in total. If we want to look at the penalty relative to that figure, it would be 16% of the turnover of the affected business,” Naidu said.