Coro­brik sur­prised by its price fix­ing re­fer­ral

The Star Early Edition - - COMPANIES - Roy Cokayne

PROM­I­NENT brick man­u­fac­turer and sup­plier, Coro­brik, has ex­pressed sur­prise that the Com­pe­ti­tion Com­mis­sion be­lieves agree­ments with five ri­val firms con­sti­tutes a con­tra­ven­tion of the Com­pe­ti­tion Act.

Dirk Meyer, the man­ag­ing di­rec­tor of Coro­brik, said yes­ter­day that they took the com­mis­sion’s re­fer­ral of the firm to the Com­pe­ti­tion Tri­bunal “very se­ri­ously”. But he said he was “most sur­prised” to learn that the com­mis­sion be­lieved these agree­ments gen­er­ated com­pe­ti­tion law con­cerns.

The re­fer­ral fol­lowed an in­ves­ti­ga­tion launched by the com­mis­sion in April this year against Coro­brik, Era Bricks, Es­ton Brick and Tile, De Hoop Brick­fields, Clay In­dus­try and Kopano Brick­works for al­legedly con­tra­ven­ing the Com­pe­ti­tion Act.

The com­mis­sion al­leges that Coro­brik’s agree­ments with these firms re­sulted in price fix­ing and/or the di­vi­sion of mar­kets in the man­u­fac­tur­ing and sup­ply of bricks, pavers and blocks of clay and con­crete.

Coro­brik be­lieved its agree­ments with these firms were “both le­git­i­mate and de­fen­si­ble in terms of the Com­pe­ti­tion Act and that the com­mis­sion’s con­cerns are at­trib­ut­able to a mis­un­der­stand­ing of the com­mer­cial ar­range­ments in ques­tion and the mar­ket gen­er­ally”.

Agree­ments

He stressed that the com­mis­sion’s re­fer­ral of the case to the tri­bunal did not con­sti­tute a find­ing against Coro­brik and sim­ply re­flected the com­mis­sion’s views based on its un­der­stand­ing of the agree­ments.

“The ques­tion of whether or not the con­duct ac­tu­ally amounts to a con­tra­ven­tion of the Com­pe­ti­tion Act re­mains to be ad­ju­di­cated by the tri­bunal.

“Con­se­quently, Coro­brik is look­ing for­ward to the op­por­tu­nity to clear its name and is con­fi­dent that a thor­ough ven­ti­la­tion of the rel­e­vant facts and cir­cum­stances be­fore the tri­bunal will set the record straight,” he said.

Meyer added that Coro­brik would like to as­sure its em­ploy­ees, sup­pli­ers, cus­tomers and busi­ness part­ners that while this process was likely to take some time to fi­nalise, the com­pany’s op­er­a­tions would con­tinue un­af­fected and it re­mained com­mit­ted to all of its stake­hold­ers.

Sipho Ng­wema, the head of com­mu­ni­ca­tions at the com­mis­sion, said this week that Coro­brik al­legedly en­tered into separate bi­lat­eral agree­ments with each of the other five com­pa­nies in terms of which they agreed to di­vide up the mar­ket by al­lo­cat­ing spe­cific prod­ucts and/or cus­tomers in con­tra­ven­tion of the Com­pe­ti­tion Act. Coro­brik and Era Bricks al­legedly agreed to fix prices at which they sold bricks, pavers and blocks, also in con­tra­ven­tion of the Com­pe­ti­tion Act, he said.

No di­rect sup­ply

Ng­wema said Coro­brik and Era Bricks al­legedly also con­cluded a me­moran­dum of agree­ment.

In terms of that agree­ment, they al­legedly agreed that Era Bricks would not sup­ply its prod­ucts di­rectly to cus­tomers in com­pe­ti­tion with Coro­brik but in­stead would sell di­rectly to Coro­brik, which would then sell to cus­tomers in the open mar­ket.

It was fur­ther al­legedly agreed that Era Bricks would not man­u­fac­ture or sell any bricks other than the types it was man­u­fac­tur­ing and sell­ing to Coro­brik and it would not man­u­fac­ture or sell any com­pet­i­tive prod­uct ca­pa­ble of be­ing used in the brick in­dus­try in sub­sti­tu­tion for bricks.

In terms of the agree­ment, it was also al­leged that it was agreed that if Era Bricks had ex­cess prod­ucts, it would not to sell the ex­cess prod­ucts at prices that were lower than those charged by Coro­brik.

Ng­wema said Coro­brik al­legedly also con­cluded separate bi­lat­eral dis­trib­u­tor­ship agree­ments in­di­vid­u­ally with Es­ton Brick, Clay In­dus­try, De Hoop and Kopano.

In terms of these dis­trib­u­tor­ship agree­ments, Es­ton Brick, Clay In­dus­try, De Hoop and Kopano al­legedly agreed with Coro­brik that they would not sup­ply their re­spec­tive prod­ucts di­rectly to cus­tomers in com­pe­ti­tion with Coro­brik.

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