Glass companies face prosecution over cartel activity
COMPANIES that participated in cartel activity in the glass manufacturing industry face prosecution by the Competition Tribunal following an investigation by the Competition Commission.
The commission’s investigation, which started in 2010, showed that Glass SA, National Glass, Northern Hardware and Glass, Furman Glass, McCoy’s Glass and AF-FSL Glass fixed minimum selling prices.
They also fixed the percentage by which minimum prices would increase and the date for the implementation of the fixed prices.
The cartel allegedly operated in Gauteng, the Free State and the Western Cape.
The products involved included float glass — which is necessary for the manufacturing of windows, laminated glass — which is a type of safety glass used in automobile windshields and skylight glazing, and toughened glass — which crumbles into granular chunks and is used in passenger vehicle windows, shower doors, refrigerator trays and various types of plates and cookware.
Knowledge of the cartel, which existed from 1995-2007, surfaced in 2009 when cartel member AF-FSL Glass applied for leniency from prosecution by providing information of the “boys club”.
According to the information supplied, cartel meetings took place in hotels, pubs and even on boat trips to Zimbabwe to fix prices, share markets and to fix trading conditions among cartel members.
The commission’s investigation showed that cartel members also agreed in 2005 to introduce a distribution or transport levy of 3% of the price charged to customers.
AF-FSL was granted immunity from prosecution.
Deputy commissioner Trudi Makhaya said yesterday the commis- sion’s investigation was focused on the prosecution of the cartel.
She said the commission has not conducted a formal impact assessment after the investigation. Ms Makhaya emphasised that prices did not necessarily decrease immediately after the exposure of a cartel since there were other factors such as input costs that influence prices.
“However, the commission’s investigation established that there have been some changes in the market after 2007,” she said.
“For instance, the transport levy is now a customer per customer arrangement. This means that wholesalers are not forced to impose the same levy on all customers,” Ms Makhaya said.
She said that some of the wholesalers have also entered new geographic areas. “This could be because they are no longer controlled by the cartel. One of the small independent manufacturers has opened new branches in various towns that they had not been trading in when the cartel was under operation,” Ms Makhaya said.
The commission has asked the tribunal to impose an administrative penalty of 10% of the annual turnover on each of the companies involved in the cartel.