COOK­ING OIL CAR­TEL’S ‘CLOSED LIST’

CityPress - - Business - DEWALD VAN RENSBURG dewald.vrens­burg@city­press.co.za

The con­sumer goods be­he­moth Unilever en­tered into a num­ber of writ­ten agree­ments with Malaysian-owned Sime Darby Hud­son & Knight, among them an ex­plicit “non­com­pete” list of prod­ucts.

This is the main ba­sis of the case for mar­ket divi­sion re­ferred to the Com­pe­ti­tion Com­mis­sion this week around Unilever’s al­leged car­tel con­duct in the mar­garine and cook­ing oil mar­ket.

Unilever con­trols the Stork, Rama and Flora brands. Sime Darby’s ma­jor brand is Crispa. The com­mis­sion is ask­ing for the max­i­mum 10% fine on Unilever’s rev­enue in South Africa af­ter hav­ing set­tled with Sime Darby ex­actly a year ago, in March last year.

The Com­pe­ti­tion Tri­bunal re­leased the re­fer­ral it re­ceived from the Com­pe­ti­tion Com­mis­sion on Fri­day.

It in­cludes the “non-com­pete” list along­side an af­fi­davit from an in­spec­tor at the com­mis­sion, Tshep­iso Mn­guni.

The in­ves­ti­ga­tion into Unilever and Sime Darby started in Oc­to­ber 2012 af­ter a com­plaint by busi­ness­man Juan Ler­ena.

Orig­i­nally, there was another ac­cused com­pany, Felda If­fco, also a Malaysian group with a cook­ing oil re­fin­ery in Johannesburg.

Sime Darby Hud­son & Knight had pur­chased Unilever’s re­fin­ery and bak­ery busi­ness in 2004.

As part of that deal, the non-com­pete list was drawn up, as well as sep­a­rate agree­ments on other forms of co­op­er­a­tion.

Unilever pro­vides Sime Darby with raw oils, while Sime Darby gave Unilever the exclusive right to pack­ag­ing its prod­ucts.

A “raw ma­te­ri­als agree­ment” reads that the two com­pa­nies must hon­our the non­com­pete agree­ment for as long as Unilever sup­plies raw ma­te­ri­als to Sime Darby.

In the agree­ment, this is called a “smart part­ner­ship” that “en­cour­ages net­work­ing and mu­tual un­der­stand­ing and sym­bol­ises the busi­ness syn­ergy be­tween the par­ties to ac­com­plish mu­tu­ally ben­e­fi­cial ob­jec­tives and out­comes”.

Another agree­ment be­tween the com­pa­nies gives Unilever the exclusive right to pack­age Sime Darby’s prod­ucts.

This “made it pos­si­ble for Unilever to mon­i­tor and en­force com­pli­ance with the non-com­pete agree­ment,” said Mn­guni.

The non-com­pete list bars Sime Darby from en­ter­ing the re­tail, whole­sale, fore­court, restau­rant, bak­ery and ho­tel mar­kets. This left it ser­vic­ing in­dus­trial cus­tomers. Unilever in turn al­legedly would not touch that re­main­ing mar­ket with its own brands.

Sime Darby agreed not to pro­duce its prod­ucts in unit vol­umes be­low 5kg for fry­ing oil, be­low 15kg for mar­garine and be­low 25kg for spe­cialty oils.

The case is go­ing to the tri­bunal de­spite Sime Darby ad­mit­ting to ex­actly the same charge in its set­tle­ment last year.

Unilever SA’s cor­po­rate af­fairs di­rec­tor, Si­bonile Dube, told City Press via email that the com­pany would not com­ment on the mat­ter be­cause it is sub­ject to lit­i­ga­tion.

Sime Darby com­mit­ted to build­ing new fa­cil­i­ties and also ap­pointed a BEE dis­trib­u­tor with a guar­an­teed, but con­fi­den­tial, rev­enue when it set­tled in March last year.

Part of Sime Darby’s set­tle­ment agree­ment was that it would tes­tify against Unilever at the tri­bunal.

The deal with Unilever ap­par­ently ended in 2013, mean­ing that Unilever would not have to worry about the re­cent crim­i­nal­i­sa­tion of car­tel con­duct.

This new penalty ap­plies to ex­ec­u­tives of com­pa­nies guilty of car­tel con­duct, but not con­duct be­fore the amend­ment to the Com­pe­ti­tion Act, which was only ef­fected in 2016.

Unilever pro­duces an as­ton­ish­ing num­ber of house­hold prod­ucts rang­ing from foods and drinks to clean­ing chem­i­cals, wash­ing de­ter­gents, soaps and de­odor­ants.

Its brands in South Africa in­clude Vase­line, Lux, Lifebuoy and Shield, as well as Omo, Skip, Sun­light and Handy Andy, Flora, Knorr, Rama and Robert­sons spices and herbs.

As a pri­vate com­pany, its rev­enues are not known, but 10% would prob­a­bly be an as­tro­nom­i­cal sum.

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