South Africa: AfriSam to pay cartel fine

South Africa: AfriSam to pay cartel fine
Published: 30 November 2011

Afrisam will pay a fine of ZAR0.9m (US$106,889) for being part of a cement cartel with the other three major players in the domestic cement industry.

This follows the Competition Tribunal yesterday confirming the settlement agreement reached between the cement producer and the Competition Commission related to its part in the cartel.

PPC applied for and was granted conditional leniency by the commission for disclosures made related to the cartel after the commission raided the premises of the major cement producers on 24 June 2009. In its application for corporate leniency, PPC confirmed the existence of a cartel to divide markets among the four cement producers to maintain the market share that each producer held prior to 1996. This was when a lawful cement cartel existed and was regulated by exemptions to the competition legislation.

PPC also confirmed it had agreed not to compete in northern KwaZulu-Natal in exchange for Lafarge South Africa not competing in Botswana.

The commission’s case against Lafarge SA and NPC-Cimpor, the alleged other members of the cartel, appears to be heading for a tribunal hearing.

AfriSam, in entering into a settlement agreement with the commission on 1 November, admitted it took part in a cement cartel and agreed to pay the ZAR0.9m penalty, which represents 3% of the company’s annual cement turnover last year in the Southern African Customs Union.

AfriSam had further agreed to refrain from engaging in anti-competitive conduct and to develop and implement a compliance programme for all its employees. The commission said in a statement that the settlement was a reflection of AfriSam’s material co-operation in uncovering and providing further information on the conduct.

In terms of the settlement, AfriSam admitted it had entered into agreements and arrangements with PPC, Lafarge SA and NPC-Cimpor to divide markets and indirectly fix the price of cement.

It also confirmed information already provided by PPC in its leniency application, including that the four cement producers agreed to divide up the cement market by allocating each producer the market share it held prior to 1996 when a lawful cement cartel existed.

This arrangement was bolstered by various meetings and contacts between the cement producers, inside and outside South Africa. They also submitted sales information to the Cement & Concrete Institute for Southern Africa and used the aggregated information received from the institute as a mechanism for maintaining their arrangement.