Afrimat faces fine for abusing its dominance

LISTED construction materials supplier Afrimat has been referred to the Competition Tribunal for prosecution for abusing its dominance by charging excessive prices for a main ingredient in the manufacture of clinker bricks.

The Competition Commission yesterday alleged that Afrimat abused its position in this market from 2012 until at least last year but the abusive conduct might be continuing.

The commission is seeking an order from the tribunal declaring that Afrimat had contravened the Competition Act and it must pay the maximum fine permitted by law of 10 percent of its annual turnover in South Africa and its exports.

The commission initiated an investigation in March 2015 into Afrimat into two of its subsidiaries, Clinker Supplies and SA Block and Concrete.

It said Afrimat escalated the pricing of clinker ash aggregate significantly and the prices dramatically exceeded its economic value. The commission found that the prices bore no relation to the economic value of the product.

Afrimat, through Clinker Supplies, had exclusive rights from Eskom to source waste ash from dumps at three disused coal-fired power stations in Gauteng and the Free State.

The commission said Afrimat also had royalty and indefinite land rental agreements with Eskom until the ash dumps were exhausted.

“The company is therefore the only supplier of clinker ash within a 100km radius of each respective ash dump site.

“This means it is dominant in the relevant geographic markets… Clinker brick manufacturers in these areas, who use the clinker ash aggregate, are dependent on Afrimat,” the commission said.

The commission said clinker ash aggregate was a main ingredient to produce clinker bricks, used for statefunded low-cost housing.