Appellate competition body questions authority’s lenient fine

south_africa

Tribunal expresses doubts as to lenient fining level of Premier Fishing

The chairman of the South African Competition Tribunal, Takalani Madima, has asked the South African Competition Commission and Premier Fishing for ‘detailed substantial submissions’ on the settlement agreement reached between them, which lets the fishing company “off the hook” for an administrative penalty of a mere R2.1m (or 2% of its revenues).

2% fine not sufficient deterrent to anti-competitive conduct

According to a BDlive report, Mr. Madima is quoted as saying: ‘I am personally not too happy (with the agreement). I am still to be persuaded.’

The underlying conduct involves a cartel between Premier Fishing and others, in which the competitors shared information and pricing regarding the pelagic fish industry.  The Commission’s July 2008 investigation included the following companies as targets: Oceana, Foodcorp (note: the two former cartelists recently decided to merge and the competition authorities imposed conditions on the planned transaction), Premier Fishing, Gansbaai Marine, the SA Pelagic Fish Processors Association, Pioneer Fishing, Saldanha Bay Canning and others.

As the leniency applicant, Pioneer Fishing obtained full immunity from prosecution.  Others, such as Oceana, settled for approximately 5% of their fishing turnover.

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Commission’s fisheries merger conditions upheld on review by Tribunal

south_africa

Competition Tribunal confirms Commission’s ruling on Oceana and Foodcorp merger

Johannesburg-listed Ocean Group Limited is the largest fishing company in South Africa, whose fishing activities include inter alia the catching, processing, marketing and distribution of canned fish, fishmeal and fish oil and mid-water and deep-sea fishing.

Foodcorp Limited is a food producer and manufacturer with eight production divisions, one of which is a fishing division. Foodcorp’s fishing business comprises a pelagic division, a hake division and a lobster division.

The Competition Commission said its investigation into the proposed transaction showed that the proposed transaction would substantially affect competition in the market for canned pilchards to the detriment of competition and customers. Following implementation of the transaction, Oceana will hold 80% of the market, while its closest competitor would hold less than 10%. Furthermore, the Commission was concerned that the transaction, without the conditions, would remove an efficient competitor to Oceana’s Lucky Star brand from the market, as Glenryck would not be able to provide competition to Lucky Star without its own fishing quota.

Both Oceana and Foodcorp contended that the Department of Agriculture, Forestry and Fisheries had approved the transfer of Foodcorp’s small pelagic fishing rights to Oceana, which includes the consideration of public interest issues regarding black economic empowerment.

The merging parties had taken the conditional approval of the intermediate merger on review before the Competition Tribunal. The conditions which the Competition Commission had imposed entailed that the merging parties are to sell the Glenryck canned-pilchards brand to an independent third party, as well as the small pelagic fish quota allocated to it by the Department of Agriculture, Forestry and Fisheries. The condition was imposed as a means that would deprive Oceana of Foodcorp’s fishing quota, thereby preventing market dominance.

The Competition Tribunal approved the transaction on the same conditions initially imposed by the Competition Commission. The Tribunal will issue its reasons for the decision in due course.