Firms referred over deal to collude

TWO local poultry feeding equipment manufacturers have been referred to the Competition Tribunal for prosecution by the Competition Commission, for entering into a collusive agreement.

The companies, Technical Systems (Pty) Ltd and CGC Industries (Pty) Ltd, trading as RTS Industries (Pty) Ltd (RTS), which supply flat wire, augers and coiling machinery to the global poultry feeding markets, face charges relating to division of markets by allocating territories, after agreeing that RTS would exit the market.

The Competition Commission’s investigation determined that the two firms’ conduct had contravened the Competition Act.

The commission’s spokesperson, Sipho Ngwema, said that after resigning from Technical Systems’ employ, the owner of RTS Industries had signed a three-year restraint of trade agreement.

“But he formed RTS and started directly competing with Technical Systems, which was in breach of the restraint of trade agreement.

‘‘In 2014, Technical Systems sued RTS and its owner for breaching the agreement, and in June 2015 reached a settlement before the Western Cape High Court, in terms of which RTS was prohibited from entering the market forever,” he said.

Technical Systems’ deal stated that RTS would never be allowed to enter the market without their approval.

Ngwema said that their investigation established that the settlement agreement ran in perpetuity, and was in contravention of the Competition Act.

“This also goes against the corporate leniency policy, which is aimed at eradicating cartel activity, as it harms the economy at large,” he said.

Ngwema said the commission was not seeking a penalty against RTS, who were assisting with the prosecution of Technical Systems.

No response had been received from the head of Technical Systems or his representative by deadline.