agriculture, BRICS, cartels, collusion, South Africa, Uncategorized

South Africa: Drought Highlights the Importance of the Basic Foods Sector to the Competition Commission

 

By Michael-James Currie

South Africa is in the midst of one of the worst droughts in decades.  The droughts impact stretches far broader than simply grass roots levels. Maize prices have recently reached a record high due to shortage of supply over the past 12 months, which, being a staple food source for the majority of the population..

It comes as no surprise that the drought has sparked interest of  the competition authorities or those wanting to use competition law as a means to promote and protect socio-economic goals.south_africa

The recent matter involving alleged price-fixing and collusion between a number of fertiliser companies (including the H Pistorius and Co. company which has strong family ties to convicted former Para-Olympian champion, Oscar Pistorius – previously reported by AAT) will be heard before the Tribunal in a month’s time.  Despite the matter laying dormant for some time, the Commission appears intent on prosecuting the respondents.  The Commission’s spokesperson stated that the fertiliser sector is viewed as a priority sector, due to the its importance as an input in the agricultural sector.  The case will undoubtedly receive additional media attention due to the heightened focus on the agricultural industry brought about by the drought, as well of course from an atmospheric perspective given the Oscar Pistorius link.

Unrelated to the fertiliser case, the Congress of South African Trade Unions (COSATU) has recently called on the Commission to investigate the maize sector for collusion. This call follows an investigation which was already carried out during 2006-2007 which saw a number of maize milling companies referred to the Tribunal for adjudication. A date for these complaint hearings has not yet been set.  The complaint brought by COSATU, which must be investigated by the Commission, relates to traders who are allegedly “buying and selling maize unlawfully and manipulating the price of maize taking advantage of the shortage of supply of maize as a result of the drought”.  The allegations have, however, been denied by AgriSA who insists that the price of maize has consistently being increasing from 2015 to over 50%.

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agriculture, BRICS, cartels, South Africa

Pistorius family embroiled in Ag price-fixing cartel

The Pistoriuses refuse to stay out of the media (Ag-)limelight

Starting in late 2009, the South African Competition Commission had suspected cartel activity in the Agricultural Lime (“AgLime”) industry.  Notably, one of the participants in the alleged price-fixing scheme was the Hendrik Pistorius Trust and its Pistorius-family trustee members, all of whom are respondents (defendants) in the action now referred by the CompComm to the S.A. Competition Tribunal (official referral document here).

The connection of this antitrust case with now-infamous Olympic runner Oscar Pistorius is obviously only a family link (based on some quick research, it seems as though one of Oscar’s cousins is involved, namely Arnoldus Pistorius, the son of yet another respondent, Leo Pistorius who is apparently known as an elephant hunter).

It is interesting to note that the Commission requests a 10% penalty, however, they do not explicitly state that it is for the period of the contravention (page 10).

On 16 January 2015, the South African Competition Commission filed a complaint against Hendrik Wilhelm Carl Pistorius N.O., Leo Constantin Pistorius N.O., Hermine Pistorius N.O., Arnoldus Kurt Pistorius,  Kalkor (Pty) Ltd, CHL Taljaard & Son (Pty) Ltd, PBD Boerdedienste (Pty) Ltd, Grasland Ondernemings (Pty) Ltd and Fertiliser Society of South Africa.

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The Commission alleges that the respondents were engaged in a prohibited practice from 1995 until 2008, by agreeing or entering into a concerted practice to fix the commissions payable by each of them to fertiliser companies who employ agents to market, sell and distribute agricultural lime, which is crushed / pulverised limestone or dolomite used for soil treatment in order to reduce the acidity of the soil.  This alleged practice is in contravention of section 4(1)(b)(i) of the South African Competition Act, which provides the following:

An agreement between, or concerted practice by, firms, or a decision by an association of firms, is prohibited if it is between parties in a horizontal relationship and if –

(a) it has the effect of substantially preventing, or lessening, competition in a market, unless a party to the agreement, concerted practice, or decision can prove that any technological, efficiency or other pro-competitive gain resulting from it outweighs that effect; or

(b) it involves any of the following restrictive horizontal practices:

(i) directly or indirectly fixing a purchase or selling price or any other trading condition;

(ii) dividing markets by allocating customers, suppliers, territories, or specific types of goods or services; or

(iii) collusive tendering.

 

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