Pinetown firm to pay R29m fine for price fixing
A PINETOWN-based company has been fined R29.7 million by the Competition Commission after admitting to price fixing and market division transgressions.
The Competition Commission said NCS Resins, a resin manufacturing firm, had colluded with a Hammarsdale company, Scott Bader, to fix the price of resins, ancillaries and catalysts and to divide the market by allocating customers.
An investigation, launched by the commission in July last year, found that employees from both companies colluded by exchanging price and consumer information.
“They used this information to determine prices at which they would sell their products to mutual customers. They also used the information to determine future price increases,” said commission spokesperson, Sipho Ngwema.
“The companies also agreed not to supply customers who had overdue accounts with either or both companies, and agreed not to target each other’s potential customers. In addition, they agreed not to undercut each other in respect of mutual customers,” he said.
Both companies make and supply polyester resin to various industries, such as construction, transport, recreation, chemicals and mining. Resin is a solid or liquid synthetic organic polymer used as the basis of plastics, adhesives, varnishes and other products.
On its website, NCS says its resins are used in products such as canopies, yachts, surfboards, baths and pools.
“Resin is a solid or liquid synthetic organic polymer used as the basis of plastics, adhesives, varnishes or other products. NCS also manufactures and supplies a wide range of gelcoats, pigments, pool coats, flow coats and bonding pastes (ancillaries),” Ngwema said.
NCS spokesperson Anne Dunn said the “conduct appears to have taken place over a period of two to three years, leading up to August 2016”. She added that it appeared it was “confined to a limited number of individuals”.
NCS has negotiated to pay the fine in three equal instalments, over a three-year period starting next month.
She said the current management was not aware of these transgressions but when they came to light it “voluntarily brought them to the Competition Commission’s notice and agreed to work in co-operation with the commission’s investigation”.
Dunn said NCS had also launched an internal investigation conducted by an independent external body.
“In addition to launching an internal investigation and co-operating fully with the Competition Commission, NCS has also taken significant steps to revise and improve its compliance processes by implementing a more comprehensive competition law compliance policy across its entire operation.
“Participation in this programme will be compulsory for all existing and future employees.”
Dunn said the directors and the executives deeply regretted the past conduct and pointed out that the transgressions were committed prior to the appointment of the current managing director.
“The company assures employees, customers and partners that NCS is committed to conducting business ethically and responsibly,” she said.
NCS managing director Trevor I’Ons said in a statement: “Our intention is to deeply embed a culture of compliance across our organisation to ensure this behaviour never happens again.”
Asked to comment on the allegations that Scott Bader took part in the cartel behaviour, the company’s managing director, Badruldien Mohamed Yunus, said that it would not be appropriate for the company to give detailed responses to questions from The Mercury on the matter as the process was ongoing.
“Suffice to say that Scott Bader is co-operating with the commission’s investigation. Such behaviour is entirely contrary to Scott Bader’s values. We are committed to offering the highest quality products at competitive prices, in compliance with competition law,” Yunus said.
Professor Bonke Dumisa, an economist, said that the consumer was prejudiced by price fixing.
“Under normal circumstances, where there is fair competition, prices tend to be lower as companies try to use the price as a competitive tool through which to sell their products,” said Dumisa, also a member and former deputy chairperson of the National Consumer Tribunal.
He added that there were more unrelated cases of cartel behaviour being investigated by the Competition Commission. This was because South Africans had become more aware of competition laws, and more cases were being reported.
Dumisa explained that the commission was the investigative and enforcement agency, while the tribunal had adjudicative powers.