The first six respondents are members of SAPIA and are oil companies active in the production, marketing and distribution of various petroleum products in South Africa.
"This referral flows from wide ranging investigations by the Commission into possible collusive conduct in liquid fuels. The investigation started in January 2009 based on information received from various sources.
"The investigation revealed collusive conduct through extensive exchanges of commercially sensitive information by the respondent oil companies. According to the Commission's investigation, this information exchange started in the late 1980s, and, from 2005, was largely through SAPIA," the commission said.
The information exchanged was monthly sales volumes of each oil company, per product category, to defined groups of customers in each magisterial district, it added.
The various product categories included petrol, diesel, illuminating kerosene, heavy furnace oil, bitumen, liquid petroleum gas and lubricants, and specific grades within these categories.
"The information at this level of detail allowed the oil companies to closely track each other's sales and to align their strategies in the market, eliminating competition between themselves. This also enabled them to divide or allocate markets by deciding not to enter, or compete for, certain geographic markets or customer groupings given the activity of other oil companies in such markets," the commission said.
The diesel price is not regulated but there is a maximum Wholesale List Selling Price ("WLSP") published by the Department of Energy.
"The oil companies used the WLSP as their list price, and their conduct prevented competitive discounting off this benchmark. The oil companies intended, inter alia through the information exchange, to protect historically high profit margins. The Commission's investigation also uncovered wide-ranging understandings about how the industry should operate. This included influencing regulation of the industry and undermining entry to maintain the status quo," it added.
The ability to identify sales by specific company was particularly important when Sasol ended the Main Supply Agreement and was growing its sales in the market. The information enabled the oil companies to prevent this change leading to price competition in the market, the Commission said.
The Commission concluded that the oil companies had engaged in price fixing and market division in contravention of section 4(1)(b) of the Act.
This conduct had a far reaching effect given that commercial customers of diesel include farmers, road freight industry, transport industry, and fishing and mining industries, it added.
The referral concerns the production, marketing and distribution of diesel in its various grades, in particular regarding sales of diesel to commercial customers (as opposed to retail diesel sales). The Commission is still investigating possible contraventions of the Act by the respondents in the other product categories.
The Commission has requested the Tribunal to levy an administrative penalty amounting to 10% of total turnover of the respondent's turnover in and export from South Africa in the preceding financial year.
SAnews.gov.za is a South African government news service, published by the Government Communication and Information System (GCIS). SAnews.gov.za (formerly BuaNews) was established to provide quick and easy access to articles and feature stories aimed at keeping the public informed about the implementation of government mandates.
Go to: http://www.sanews.gov.za
