RAND REFINERY DROPS KRUGER RAND
Consent agreement which barred the public from dealing in bullion removed
THE COMPETITION Tribunal has confirmed a consent agreement in terms of which Rand Refinery undertook to remove a requirement for people to become bullion Krugerrand dealers.
The agreement came into being after the Competition Commission found the requirement that dealers must be members of the SA Association of Numismatic Dealers (Saand) created artificial barriers to entry into the primary dealers market.
The tribunal said the requirements created a barrier to entry for prospective dealers of these coins in the local numismatic industry.
Thokozile Lekhuleni, appearing for the commission, said the commission in April this year received a complaint from Edward Mokhoanatse that the requirement for membership of Saand was exclusionary and prevented prospective dealers of bullion Krugerrands from being appointed as dealers in the South African numismatic industry.
Rand Refinery is the sole supplier of bullion Krugerrands but does not sell direct to the public and distributes them through authorised primary dealers, who in turn sell to the public.
Saand is a voluntary association of numismatic dealers with the mandate to co-ordinate, promote and develop the numismatic trade in South Africa.
Lekhuleni said the Saand membership requirement was one of the tools used by Rand Refinery to ensure that existing and prospective coin dealers were reputable businesses.
But Lekhuleni said the commission found the constitution of Saand also allowed incumbent association members to frustrate new membership because Saand’s constitution specifically stated that all applicants for full membership should be proposed and seconded by two member firms.
The constitution also allowed Saand to deny membership to any prospective dealer of Krugerrands without giving any reasons for the decision, she said.
Lekhuleni said the commission contacted Rand Refinery in May and made the company aware that there were other regulatory entities that could be used for vetting purposes of prospective and existing members, such as the SA Revenue Service, Financial Intelligence Centre (Fica) and the SAPS.
She said Rand Refinery subsequently removed the Saand membership requirement and undertook not to make it a requirement in future.
Lekhuleni said the commission was aware of only one complaint related to this conduct.
Robert Wilson, appearing for Rand Refineries, said Saand’s constitution and code of ethics were driven towards ensuring that coin dealers were reputable and credible people and the products they were selling were authentic and not fake or stolen.
Wilson added that despite the consent agreement being initiated as a contravention of the Competition Act, the commission and Rand Refinery had agreed that Rand Refinery made no admission of liability although it had altered its conduct.
Wilson said the wording in the consent agreement indicated that Rand Refinery had ceased any form of prohibitive practice, suggesting the conduct was in fact prohibited and a contravention of the Competition Act.
“We don’t want that wording in any way to be suggestive and undermine the fact that Rand Refinery is settling on the basis of no admission of liability,” he said.
Wilson said Saand membership was a legitimate requirement, but time had moved on and Rand Refinery was happy to put in place different requirements to ensure they were trading with credible principal dealers in Krugerrands.
Mokhoanatse, the complainant, confirmed to Business Report after the hearing that he had become a primary bullion Krugerrand dealer nine months after his initial application was rejected.