South Africa’s Competition Commission has entered into a settlement agreement with AfriSam, in which the company admitted that it took part in a cement cartel.
AfriSam agreed to pay a penalty of about ZAR124.9m, which represents three per cent of its 2010 cement annual turnover in the Southern African Customs Union (SA, Botswana, Lesotho, Swaziland and Namibia).
"This settlement is a reflection of AfriSam’s material cooperation with the commission in uncovering and providing further information on the conduct," the group said.
The agreement followed the commission’s investigation of price-fixing and market allocation against four cement producers: Pretoria Portland Cement Company (PPC), Lafarge Industries SA, AfriSam Consortium and Natal Portland Cement Cimpor. The commission initiated the case on June 2 2008. It raided the premises of the four cement producers in June 2009. Subsequently, PPC applied for leniency and confirmed the existence of a cartel among the four.
In terms of the settlement, AfriSam admitted that it entered into agreements and arrangements with PPC, Lafarge and NPC to divide markets and indirectly fix the price of cement. It also confirmed information already provided by PPC in its leniency application. It was found that the four cement producers agreed to divide the cement market among themselves by allocating each producer the market share that 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 SA.
The four cement producers also submitted sales information to the Cement and Concrete Institute for SA (C&CI) and used the aggregated information received from the C&CI as a mechanism for maintaining their arrangement. AfriSam further agreed to refrain from engaging in this conduct and to develop and implement a compliance programme for all its employees. The commission was at an advanced stage of this investigation and would look at concluding it with AfriSam and PPC’s cooperation. The commission filed an application for the confirmation of this settlement agreement with the tribunal.