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Sasol fine 'miniscule'

by
2008-10-06 08:41

Tshepo Matjila, News24 User

The recent spate of exposés on anti-competitive behaviour by some of SA's largest corporate companies should not be taken lightly. Sasol is the latest company to be implicated in anti-competitive behaviour by the European Commission at their international wax business.

The company is being fined R3.7bn (half of what was originally fined) because of having co-operated with the authorities. This fine is rather miniscule if you look at the profit they turned in the 2007/08 financial year: R34bn - a 32% increase from the previous year.

The fine represents about 11% of the total operating profit that Sasol made this year - a rather small amount given that those consumers who got ripped off will not see a cent of this punitive measure nor see a reduction in the current price they are paying for this goods.

Cartels represent the bad of society as their collusion curtails free market competitiveness for small businesses and ends up hurting the most vulnerable group in the society, ie the poor. Oft these are also the people who need to use this service more frequently and the fixing of such goods and commodities hurts them where it matters most - their pockets.

First it was the milk cartels in SA, then the bread cartels, again the generic drugs mafias and now this. What is wrong with these executives? Is all they care about super-profits at the expense of the poor? Do they realise that this anti-competitive behaviour is akin to human right violation?

I mean how else is the public supposed to get the best deals on goods and services if the prices are regulated by a few rogue executives with the intentions of making a quick buck?

Just as despots are tried for human rights violations, I urge the authorities to tighten legislation around anti-competitive behaviour to make this a crime against humanity. We cannot continue to tolerate such deplorable behaviour by slapping these rogues with small fines that don?t really make a difference to their businesses.

Something more weighty and more punitive needs to be devised so that we can ensure that we uproot all evil executives from influencing prices unjustly and thus hurting the (poor) consumer!

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ShRoOm 10/6/2008 8:51:27 AM
I suggest we take SASOL'S board of directors and dip them each in hot tar. Then once they are nice and sticky we should have a pillow fight with them...
Sven 10/6/2008 8:56:51 AM
Tshepo, I think you misread the story, it is 3,5 Billion Euros, not Rands, which is closer to R40 Billion, depending on the exchange rate when they eventually pay it, as I believe they are going to appeal. As to making uncompetitive behaviour a crime against humanity, you are joking surely, how can collusion in pricing ever be compared to the suffering of people aka Zimbabwe, I do not hear calls to have Zanu PF charged with crimes against humanity, this is duplicity at its worst.
VG 10/6/2008 9:03:59 AM
that sasol will simply pass this cost on to consumers, just like Tiger Brands did.I'm not sure fines are the way to go.Measures such as jail terms for the executives involved would be far more effective I think. The only long-term solution, though, is for govts to discourage the formation of monopolies/highly concentrated industries in the first place.
PH 10/6/2008 9:06:07 AM
the fine was 318 million euro. Use the internet.
colin 10/6/2008 9:06:35 AM
Laws needs to be put in place which will ensure government to bring criminal charges against executives who makes themselves guilty of price fixing. Fixing prices is the same as stealing from the poor and we can equate it to corruption - it seems to me that our top executives are just as corrupt as our leaders government.
Libembe 10/6/2008 9:14:10 AM
I wrote the same article last year and stated that such behaviour amounts to theft as prices are artificially increased due uncompetitive behavior. The sooner we criminalised price fixing and collusion the better it will get. Sasol applies import parity pricing in SA anyway ie its costs are in Rands yet profits are in dollars. They had no reason to act in this greedy fashion, Sasol has a bad reputation with authorities in SA anyway.
Oom_Kosie 10/6/2008 9:14:18 AM
You need to look at profit after tax. And Sven, it's not 3.5 billion Euros. It's something like 314 Euro.
Dawid 10/6/2008 9:14:24 AM
Funny how, the moment the bread cartel was exposed, and fined, the bread price went up by R2. Same with milk, only that went up by R5. In this case, I think the bread and milk cartels was trying to keep bread and milk as low as possible, while at the same time, making sure all companies make profit, now, they don't care anymore
Greg 10/6/2008 9:24:54 AM
... and is a corrupt govt, stealing from the poor making super profits, not a crime against humanity? Or is ok to be so if you belong to ANC? lol. and it was not Rands quoted, it was Euros. We also cannot tolerate criminals running our bloody country. We need to uproot all evil and corrupt govt. officials!! Cleanse from the top down! Slapping them with constant court cases further depletes tax payers money! whats good for the goose friend...
Chris 10/6/2008 9:25:39 AM
314 million Euro's is basically petty cash to Sasol.
HT 10/6/2008 9:28:52 AM
Where does the fine go to? If I understand right, this price fixing influenced some poor people. So who gets the monies from the fine? And what is done with it? Can anyone explain that to me?
Morgoth 10/6/2008 9:30:53 AM
I believe that all involved in these scandals be named and shamed. And not some obscure web site but in all media that reaches the common man on the street. Add a photo so we can point at him a local supermarket and laugh at him. Lets make it unthinkable to screw the consumer like this. Money comes and goes. Tarnished reputations take a while to restore. My 2cents
HT 10/6/2008 9:32:28 AM
I think you are right about fines not being the right thing. But I think rather than jail terms they should be punished by being forced to take smaller profit from their sales, donate the rest to charity for a specified period.
Mark V 10/6/2008 9:35:05 AM
To see the SA consumer who funded the formation of SASOL on promises of cheaper fuel still having the fork out prices dictated by large oil companies. Serves them right for exploiting the public. Pity we have to fund this fine also! When will the real criminals in cases like this be brought to justice - the masterminds behind there cartels?
Javas 10/6/2008 9:35:35 AM
Hi Sven, You got it wrong buddy, Tshepo is right, heads must roll, this is just crazy that they can just get a fine and walk away! Deplorable! I reckon they should not even appeal the decision, they are as guilty as hell judging from what Pat Davies said...somebody needs to account for this daylight robbery...We complain when politicians do it, but when it is done by the white collar criminals we keep quite! Tony Yengeni and Pat Davies are no different on the scales of morality,criminals!
Ndumiso 10/6/2008 9:37:16 AM
Your argument is well intentioned, but I do not agree 100% with you. This fine was based on the Hamburg division of Sasol Wax GmbH. This was a company acquired by Sasol in 1995 where the so called wax cartel. Sasol International was not involved in this cartel and therefore unfair to impose the fine for all divisions. This company contributed little to the profit you mention. Most of their profit was based on legit business actually. So personally, I sympathise with them.
charlie 10/6/2008 9:37:35 AM
The governmunts commintment towards the poor ,, I mean its not the middle class people who makes the most use of parrafin... The rich are getting richer and the poo getting poorer ...
Point Blank 10/6/2008 9:39:50 AM
Greed is an addictive fix. Look at the latest ruling party fiasco and see greed in all its form. Once you taste extreme wealth and favour it becomes inpossible to cure, and you don't care about anyone but yourself....personally I think they should be stripped of their wealth and made to work for the various municipalities sweeping streets until they retire, which will only be afforded a government pension.
Point Blank 10/6/2008 9:39:51 AM
Greed is an addictive fix. Look at the latest ruling party fiasco and see greed in all its form. Once you taste extreme wealth and favour it becomes inpossible to cure, and you don't care about anyone but yourself....personally I think they should be stripped of their wealth and made to work for the various municipalities sweeping streets until they retire, which will only be afforded a government pension.
VG 10/6/2008 9:41:06 AM
Companies should be donating to charity anyway as part of their CSI I think. Why turn something disgraceful (price-fixing) into something good (extra money for charity)?
Sven Gohre 10/6/2008 9:49:09 AM
I beg your forgiveness, re-reading the headline correctly this time, I see the R before the 3,7 bn EU. So to Sepho, my apologies, but I still maintain that price fixing or cartels cannot be equated with crimes against humanity.
Kolobe 10/6/2008 9:51:34 AM
leave Zimbabwe out of this chief?.George Bush has murdered millions of Asian people in pretence calling it the war on terror and weapons of mass destruction and we don?t hear you calling for his head, you are a hypocrite, as for Sasol yes we should sue their ass for crime againts humanity,how can they fix the price of paraffin...thats killing the poor of poorest indirectly...
Thokozani 10/6/2008 9:51:59 AM
Sasol should be ashamed of themselves, i'm glad that we are now beigining to clamp down on different unethical business behaviors.When these cases are presented i'm always reminded of the tiger brands case, yes the company was fined but the braed continues selling at an exobitant price. Same thing will happen with Sasol , pay the fine and it's business as usual.
MarcD 10/6/2008 9:58:34 AM
When you look around at our leadership and how they conduct themselves, is it really any surprise that the big companies are going to emulate them? Not at all, I venture.
pete 10/6/2008 10:03:06 AM
R3.5bn is material to shareholders and to our economy. It also ignores cyclical fluctuations in Sasol profits due to oil prices. Right now, the Rand and our resources markets are being battered - we don't need this too. But why is this so wrong and corruption not so wrong? Where is the balance? Besides, Sasol's only fault was in paying good money to take over an offending firm, 8 years after the cartel started.
John Camp 10/6/2008 10:05:47 AM
I agree Tshepo, but instead of sitting around moaning about it i suggest we adopt the European approach and BOYCOTT this lot! Oh yes, and why don't you boycott buying their shares, i'd like to but i'm not allowed to buy. ;-)
HT 10/6/2008 10:11:16 AM
Where else does the money for the fines go? I don't know that answer yet, but I suspect it is enriching another organization? And if you throw them in jail, they sit and eat there on the taxpayers account? The profit they made (more so in the case of the bread and milk price fixing) was taken from poor people. They must give it back.
Andy 10/6/2008 10:11:37 AM
You did not mention how we get ripped off in telecoms, bank fees, vehicle prices and many more, because of price fixing. I believe there are new laws going into effect that will hold the directors of companies personally accountable if they are incolved in price fixing. Hopefully that will make them think twice.
TTboy 10/6/2008 10:13:23 AM
The purpose of business is to make money, lots of it. The only time anything becomes unethical is when you get caught out, so Sasol had messed up by getting caught out!! Capitalism is not for sissies.
ShRoOm 10/6/2008 10:16:09 AM
Is killing the poor a worse crime than killing the rich? Murder is murder either way you look at it and as for your statement about George Bush - his people actually voted for him, unlike your buddy Mugabe. I personally feel any fines gathered should be used to educate the masses...
Al 10/6/2008 10:17:44 AM
Firstly jail the people responsible including the CEO, COO and CFO. Thereby the top brass will take more responsibility for what is happening in his or her company. Secondly, do not impose a fine, but impose a price freeze on that companies product at current prices for at least 50% of the time that the cartel was in operation. Exclude labour costs in the freeze. This should ensure the consumer wins back some expenses, while the company stays afloat.
Godfrey 10/6/2008 10:31:29 AM
This practice started in 1992 until 2005.As far as i know the ANC was not in power in 1992.
David 10/6/2008 10:35:38 AM
... throwing rotten fruit and veg at people who have stolen or defrauded the public. lets chain them up in the town square and throw things at them when we walk past - I think this will also help nation building. Its the only way.
fandash 10/6/2008 10:35:43 AM
Could someone please enlighten us as to what the difference is between what SASOL (Tiger Brands etc) did, and how the government controls and regulates the petrol price? In my opinion there is no difference as it is interference in free market forces.
malcolmx 10/6/2008 10:40:54 AM
Sasol have appealed this fine, based on the fact that a subsidary company, which they acquired, was involved with this cartel prior to Sasol having acquired this subsidiary. It will be interesting to see the final outcome. I do believe Sasol should be assisting the South African population with reduced fuel prices. Sasol was developed with the current specific oil price crisis in mind. Its payback time.
Sven Gohre 10/6/2008 10:42:03 AM
Thank you for making my point for me. When those leaders world wide are hauled before the courts charged with crimes against humanity, George Bush, Tony Blair, Robert Magabe, and many more from Pakistan, North Vietnam, Sudan Drc and all the others, then we will have started to reduce the suffering of the worlds poor. Charging companies with this crime defies logic.
HT 10/6/2008 10:43:03 AM
Sounds like fun! I think the birds will appreciate that. Can you imagine pigeons then coming to eat the fruit. And recycling it on their heads... Can I bring some corrupt members of public service to the party? Its like we are being bullied by a few in power. Paraffin is used by the poorest in our country! Shame on them!
AL 10/6/2008 10:43:35 AM
Is it a co-incidence that their BEE share scheme was just a few months ago? Did they know that they were going to have to pay this fine? And did they structure this deal in part to bolster their cash flow? And what else is in store down the line for those BEE shareholders who are 'stuck' with their shares for 10 years?
AJ 10/6/2008 10:48:44 AM
Perhaps a slight exaggeration there as you do not like him. As for Sasol, only 50% of fine is payable I believe due to assistance rendered. Fining is the only way to punish, if the amount is too small, then it does not mean fining is the problem, it is just the lenience of it.
Frikkie Thompson 10/6/2008 10:53:23 AM
Everywhere you turn the government is failing to regulate anti-competitive practices. If its not telkom raping the consumer with its prices and rubbish service delivery its the banks, motor industry, insurance. But what can you expect: South Africans have a culture of lying, cheating and stealing.
Len van Heerden 10/6/2008 10:54:40 AM
Try checking your facts before you criticise others. Furthermore, consumers can indeed sue Sasol to be compensated for losses attributed to the shenanigans of these Capitalists. Lastly, it is true that SASOL will simply pass this to the consumer and the tax payer. Sasol will deduct this from their profits and hence will pay less in tax revenues. SARS will hence received close to R1bn less than they would have expected.
Luyolo 10/6/2008 10:55:13 AM
and everyone else who wants to argue that price-fixing isn't that bad simply because there's a greater evil called government corruption... We're commenting here on Sasol's price-fixing scandal and Tshepo is right to equate it with crimes against humanity. The problem with South Africans is that dont want to get themselves out their comfort zone and try to relate with those that arent so advantaged. Having a constantly and unnecessarily rising paraffin price is extremely painful to the poor!
LvH 10/6/2008 10:58:56 AM
The difference is that when government regulates, the beneficiaries are the taxpayers rather than greedy business leaders. Furthermore, if you compare price of petrol to unregulated Europe, I think one would have to admit that we are better off. At the end of the day, chances are that some companies will have to increase prices to increase their profits in order to give their directors million rands in bonuses.
HT 10/6/2008 11:02:28 AM
I think the mere fact that it was paraffin may qualify it as crime against humanity, given that such poor people use paraffin. Could the people get their paraffin from somewhere else than this cartel (Sasol and co). As I understand some other cmpanies were also involved. Will they also be punished?
Len Anderson 10/6/2008 11:02:31 AM
Super profits by government means the money is put back into the fiscus and can result in lower taxes and spending programs that benefit the populace. Super profits by large companies mean the big bosses receive huge bonuses and yet when the company flops, their bonuses and salaries are not threatened.
John Camp 10/6/2008 11:03:07 AM
debate going to revolve around Sven mistaking the currency. Pathetic!
Muleleke 10/6/2008 11:05:52 AM
Let all South Africans stand together and show SASOL that we do not support their unethical behavior. Boycott SASOL products and spread the message. The people of SA had enough and we will show them we mean business.
JC 10/6/2008 11:05:55 AM
Have a look at the sasol website. Once top managment found out about the scandal, the guilty employees were sacked immediately... and sasol cooperated in the investigation since 2005. The fine however was only announced this week.
WTF 10/6/2008 11:06:17 AM
If it where up to most of you guys,you would have Sasol close down immediately.Do it,and see where the fuel price will end up.Oh yes,that is excluding more than 30 000 employees that will be without an income!!And trust me,the BEE shareholders should just sit back and smile.Those shares will be worth a lot more than now in 10 years time.It is just typical,get something for free,and all complain.For all BEE,work for something for once,and stop complaining!!!!!!!!!!!
Muleleke 10/6/2008 11:06:29 AM
Let all South Africans stand together and show SASOL that we do not support their unethical behavior. Boycott SASOL products and spread the message. The people of SA had enough and we will show them we mean business.
ShRoOm 10/6/2008 11:06:58 AM
Perhaps the 'poor' should start voting for someone else then?
Sinudeity@Gmail.com 10/6/2008 11:07:30 AM
What a lovely country we live in. Your fellow man can kill you any second for your new watch. And the rich companies will SCREW ANYONE to become more rich. DEATH PENALTY to those who profit out of the misery of others. THAT, or confiscate ALL their assets, and BANISH them out of the country. This should include corrupt politicians as well as businessmen.
Muleleke 10/6/2008 11:09:45 AM
Let all South Africans stand together and show SASOL that we do not support their unethical behavior. Boycott SASOL products and spread the message. The people of SA had enough and we will show them we mean business.
XENO 10/6/2008 11:11:05 AM
Good one SASOL. You've just changed my mind for me. I thought this year I will support SASOL by filling up at their petrol stations to be part of this happy family we call, South Africa. (All though I'm was not allowed to buy any SASOL shares because of my skin color) Since this story broke I really got angry about these idiots sitting in their glass houses and taking money from us. I WILL NOT FILL-UP WITH SASOL EVER AGAIN. I really hope that SARU get a new sponsor for the Springboks as well for I will not support our national team unless SARU get a new sponsor. Hello CALTEX here I come.
Oom_Kosie 10/6/2008 11:12:23 AM
The comment by Dawid makes no sense. The cartels were trying to keep the prices low? Dude! What do you know about economics? If it's profitable to keep prices low, no collusion is needed. Sasol can't very easily pass the fine's costs on, as most of its prices are regulated. The SA Competition Commission has said that criminalising the behaviour would be bad, as they rely on co-operation from the companies, which would disappear if the bosses were made personally liable. It's a Catch 22.
just askin 10/6/2008 11:28:31 AM
this fine is the equivalent of sasol paying R50000 for 80 000 low cost houses and isnt this the same bunch that tries to show it is doing so much good by sponsoring our national teams more like a national disgrace!!!
CTheB 10/6/2008 11:35:07 AM
The fine is 50% of the original because when Sasol discovered what was going on they cooperated and took action. It was apparently increased by 50% from what Sasol was originally to be fined due to being found to be the leader of the cartel. However, as pointed out, this is a European subsidiary of Sasol. The fine is based on the turnover of that business, not Sasol.
Thembalabantubonke 10/6/2008 11:36:34 AM
I see more issues raised that the recognition that someone did not do what he was asking someone to have done. Furthermore, many people keep referring to this as paraffin instead of as paraffin wax which is used in many other products other than paraffin. Unfortunately, John, your posting added very little to the debate.
Len van Heerden 10/6/2008 11:39:19 AM
Are you implying that it is the fault of government that Sasol has been found guilty of colluding with others to fix the price of oil in a subsidiary based in Europe that Sasol had owned for lass than 5 years when the investigation started?
L 10/6/2008 11:40:14 AM
So, Sasol is found guilty of price fixing and somehow this is the fault of government?
Thembalabantubonke 10/6/2008 11:41:16 AM
You sound like someone who has benefited in getting something for free.
Squash 10/6/2008 12:47:08 PM
I disagree with those who call for Sasol's product boycott, they got the fine and I think they will know better in future. The boycott will paly to the hands of foreign companies in terms of fuels, while our GDP will suffer.
ShRoOm 10/6/2008 12:55:26 PM
No, I implied that the number of poor is the fault of government - and rightly so! Since 1994 the number of poor have increased substantially. There is nobody else to blame but government and those useless, self-serving, headless chickens leading the ANC. As for Sasol, their top brass should be paraded in the main streets for the public to throw tomotoes at.

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