Spot­light on tyre man­u­fac­tur­ers over price fix­ing

Orig­i­nal com­plaint to stay

The Star Early Edition - - BUSINESS REPORT - Roy Cokayne

THE COM­PE­TI­TION Tri­bunal has re­jected an ap­pli­ca­tion by tyre man­u­fac­tur­ers Goodyear and Con­ti­nen­tal Tyre for an or­der set­ting aside a por­tion of the Com­pe­ti­tion Com­mis­sion’s com­plaint re­fer­ral against four tyre man­u­fac­tur­ers for price fix­ing.

The com­mis­sion re­ferred a com­plaint against Goodyear; Con­ti­nen­tal Tyre; Apollo Tyres South Africa, for­merly Dun­lop; Bridge­stone South Africa; and in­dus­try as­so­ci­a­tion, the SA Tyre Man­u­fac­tur­ers Con­fer­ence (SATMC), to the tri­bunal in 2010 for col­lu­sive ten­der­ing, price fix­ing of pas­sen­ger, light truck, bus, off-road, agri­cul­tural and earth­mov­ing tyres, in­for­ma­tion ex­change and mar­ket al­lo­ca­tion be­tween 1999 and 2007.

The re­fer­ral fol­lowed a com­plaint lodged with the com­mis­sion by Par­sons Trans­port in Oc­to­ber 2006, which al­leged that tyre man­u­fac­tur­ers si­mul­ta­ne­ously ad­justed their prices at about the same time and within the same pa­ram­e­ters.

This led to the com­mis­sion con­duct­ing a search and seizure op­er­a­tion at the premises of Bridge­stone, Apollo and the SATMC in April 2008.

Bridge­stone SA ap­plied for and was granted con­di­tional im­mu­nity from pros­e­cu­tion in terms of the com­mis­sion’s cor­po­rate le­niency pol­icy after ad­mit­ting it held tele­phonic dis­cus­sions and met with its com­peti­tors be­tween 1999 and 2007 to agree in prin­ci­ple that they should co-op­er­ate to en­sure sta­bil­ity in the mar­ket.

Tyre im­porters Yoko­hama South­ern Africa and Miche­lin Tyre Com­pany South Africa were found not to be in­volved in the car­tel con­duct.

The com­mis­sion’s in­ves­ti­ga­tion found that the SATMC was used as a plat­form for “cof­fee ta­ble dis­cus­sions” to de­ter­mine price in­creases and gen­eral co-or­di­na­tion in the mar­ket among the tyre man­u­fac­tur­ers.

These meet­ings were at­tended by the tyre man­u­fac­tur­ers’ sales and mar­ket­ing rep­re­sen­ta­tives and co-or­di­nated the tim­ing and the av­er­age per­cent­age price in­crease of tyres, agreed on the dis­count struc­ture to be given to tyre deal­ers and mes­sages to be given to the mar­ket ex­plain­ing the in­creases.

Var­i­ous in­ter­locu­tory ap­pli­ca­tions since the com­mis­sion’s re­fer­ral in 2010 re­sulted in Goodyear, Con­ti­nen­tal and the SATMC only fil­ing their an­swer­ing af­fi­davits to the main mat­ter last year.

In its ap­pli­ca­tion to the tri­bunal, Con­ti­nen­tal had ques­tioned whether com­plainant Par­sons Trans­port had validly au­tho­rised all the ex­ten­sions re­ceived by the com­mis­sion dur­ing its in­ves­ti­ga­tion and ar­gued that not all the ex­ten­sion agree­ments

SATMC was used as a plat­form for ‘cof­fee ta­ble dis­cus­sions’ to de­ter­mine price in­creases.

were signed by the com­plainant, with some signed by the com­plainant’s le­gal rep­re­sen­ta­tive and oth­ers by Con­ti­nen­tal Tyre’s fi­nan­cial man­ager.

The tri­bunal ruled that the Com­pe­ti­tion Act did not stip­u­late that an agree­ment to ex­tend should be re­duced to writ­ing and it had be­come a prac­tice by the com­mis­sion to re­quests ex­ten­sions from com­plainants by first ob­tain­ing these ver­bally and then sub­mit­ting them in writ­ing.

This could re­sult in the signed doc­u­ment be­ing sent back by the com­plainant after the date on which the agree­ment was ob­tained rather than the date on which the agree­ment had been ob­tained.

Goodyear and Con­ti­nen­tal had also al­leged the re­fer­ral against them was lodged out of time and should there­fore be re­jected be­cause it was filed at 4.50pm, which was after the 3.30pm time pe­riod stip­u­lated in the tri­bunal rules.

How­ever, the tri­bunal said the tri­bunal rules showed that the reg­is­trar could ac­cept doc­u­ments within or out­side the of­fice hours of the tri­bunal, in his or her dis­cre­tion, as well as at the di­rec­tion of the tri­bunal or a mem­ber of the tri­bunal as­signed by its chair­per­son.

The tri­bunal will hear dis­cov­ery ap­pli­ca­tions next week from Con­ti­nen­tal and Goodyear on fur­ther doc­u­ments they were seek­ing from the com­mis­sion. A new timetable still has to be agreed on when the main mat­ter will be heard.

PHOTO: REUTERS

New car tyres in­side the Clairoix Con­ti­nen­tal tyre fac­tory in this file photo. Tyre man­u­fac­tur­ers Con­ti­nen­tal and Goodyear are probed by the Com­pe­ti­tion Com­mis­sion over price fix­ing al­le­ga­tions.

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