Companies, Page 19
Retailers under pressure as consumers tighten their belts
SIX MANUFACTURERS and suppliers of bricks, pavers, including clay and concrete blocks, have been charged by the Competition Commission for price-fixing and division of markets.
The six charged are Corobrik, Era Bricks, Eston Brick and Tile, De Hoop brickfields, Clay Industry and Kopano brickworks.
Commission communications head Sipho Ngwema said yesterday the charges followed a probe in April into alleged contraventions of the Competition Act relating to price-fixing and division of markets in the manufacturing and supply of bricks, pavers, blocks of clay and concrete.
Ngwema said 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 act.
In addition, Corobrik and Era Bricks allegedly agreed to fix the prices at which they sold bricks, pavers and blocks, he added.
Ngwema said Corobrik and Era Bricks allegedly also concluded a memorandum of agreement. In terms of it, they allegedly agreed 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.
Collusion
The commission said they also 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.
The commission claimed that the companies also agreed that in the event that Era Bricks had excess products, it would not to sell the excess products at prices lower than those charged by Corobrik.
Ngwema added that Corobrik allegedly also concluded separate bilateral distributorship agreements individually with Eston Brick, Clay Industry, De Hoop and Kopano.
In terms of these, 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 and instead each supply their respective products to Corobrik, which would then sell directly to customers.
The commission’s investigations into the construction materials sector follows it identifying the infrastructure and construction sector in about 2009 as one of four broad priority sectors in which it would undertake proactive analysis of possible competition-related problems.
This led to the commission reporting in June 2013 that 15 firms had agreed to pay fines collectively totalling R1.46bn for collusive tendering in contravention of the Competition Act.
Then commissioner Shan Ramburuth told the parliamentary portfolio committee on trade and industry in 2009 that price trends of building materials were much higher than the price of raw commodities. The commission subsequently referred a number of cases to the Competition Tribunal.