Sasol to dig deep to pay R534m competition fine

2014-06-08 15:00

It is nowhere near the R1.46?billion levied on the construction cartel, but Sasol will still have to dig deep to pay a R534?million fine imposed on it by the competition tribunal.

The fine was for subsidiary Sasol Chemical Industries (SCI), which was found to have overcharged for purified propylene and polypropylene, which is used to make plastic products, between January 2004 and December 2007.

The amount it charged its only external customer and competitor for purified propylene, Safripol, inhibited the Safripol’s ability to compete with SCI, the tribunal found.

The fine was welcomed by the Manufacturing Circle, which said the ruling was “in favour of the productive side of the economy and will benefit downstream competition in plastics”.

It also pointed to another area – the pricing of natural piped gas – “in which the regulatory framework is too soft to ensure Sasol offers cost-reflective prices in an area where it has a monopoly”.

Safripol, an SME that also manufactures and supplies polypropylene and polyethylene, brought Sasol’s anticompetitive behaviour to the attention of the competition commission.

According to the judgment handed down by the tribunal, prices charged by SCI had a significant adverse effect on the local plastic converters and caused them harm during January 2004 and December 2007.

Competition commissioner Thembinkosi Bonakele called the outcome a “watershed moment in the fight against exploitation”.

The commission would work on a pricing remedy to ensure that barriers in the plastic market were reduced to foster a competitive environment, he said.

Safripol public affairs director Ian Kennon said the company was pleased with the verdict. “Our first reaction is that?...?Safripol will be better placed to continue being a supplier of choice for many sectors of the polypropylene business.”

Instead of imposing an administrative penalty only, the tribunal opted for a reduced monetary penalty but forced a method of determining SCI’s future pricing of both inputs that would see the prices charged by SCI to local customers drop.

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