Kap Diversified Industrial goes to High Court in competition matter

By Edward West Time of article published Nov 18, 2019

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CAPE TOWN - Listed group Kap Diversified Industrial (Kap), which has been involved in a Competition Commission investigation into alleged cartel activity by its wood panelling and decorative operations since 2016, said it had taken the matter to the High Court.

This was after the commission on Friday said that it had found Kap, and/or its former parent Steinhoff, and a competitor in the wood panelling and decorative market Sonae Auraco, had engaged in cartel activity by fixing prices, the percentage of price increases, and what prices should be charged to top clients between 2009 and 2016. Kap, through its PG Bison operations, and Sonae are the largest manufacturers of wood-based panel products in South Africa that are used to build commodities such as cupboards, furniture and caskets.

The companies had also met frequently at the time to discuss and agree on the percentage amount of price increases, and the dates to effect such increases, the commission said.

The commission referred the matter to the Competition Tribunal, with a recommendation that Kap and/or its former parent Steinhoff, pay a fine of up to 10percent of revenue.

The commission did not intend to seek a penalty against Sonae, as Sonae had admitted liability and agreed to pay a R46.9million fine, and had agreed to testify against Kap and/or Steinhoff.

Kap had a turnover of R25.6billion in the year to June, and its integrated wood panel business PG Bison contributed contributed R4.03bn of that. Steinhoff sold its remaining 26percent stake in Kap earlier this year.

The settlement agreement between the commission and Sonae was confirmed by the Competition Tribunal on November 6.

A day later and “following extensive legal advice, PG Bison filed an application in the High Court” to “review certain decisions taken by the commission in relation to the matter,” after Kap had co-operated with the commission on the investigation since 2018, a statement from Kap said. A spokesperson for Kap said they could not comment further on the matter.

Kap said it was informed on November 12 that the commission had referred a complaint to the Competition Tribunal against PG Bison in the matter.

The commission’s investigation followed a tip-off from a member of the public, which led to a raid at Kap’s and Sonae’s premises in March 2016. During the period of the cartel conduct and at the time of the investigation, Kap was under the control of Steinhoff.

“Cartels rob consumers of competitive prices and remain a priority for the Competition Commission. This cartel had a direct impact on prices,” Competition Commissioner Tembinkosi Bonakele said in a statement.


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