Spring Lights agrees to R10m fine for price-fixing

SASOL’s black economic empowered gas company, Spring Lights, has agreed to pay R10m for its anticompetitive agreements with Sasol Gas that resulted in market division and price-fixing.

As part of Spring Lights’ consent agreement with the Competition Commission, the company agreed to put several measures in place to prevent any of its conduct to be misconstrued as price-fixing in future.

This includes the resignation of Spring Light directors — who were active in Sasol Gas — from its board.

Spring Lights has applied to the commission for an exemption of the act in terms of the market allocation clauses in the agreements, on the basis that it promotes the ability of small business, or firms controlled by previously disadvantaged people, to become competitive. Until the exemption is granted the clauses may not be enforced.

The Competition Tribunal yesterday confirmed the consent order and fine that represents 3% of Spring Lights’ 2008 turnover.

Sasol Gas holds 49% and CEPR the rest — Sasol assisted with the creation of CEPR in an effort to advance Sasol’s black economic empowerment ideals.

Spring Lights acquired a part of Sasol Gas and entered into a range of agreements aimed at allowing for a supply of gas from Sasol Gas to Spring Lights and administrative assistance, including access to international and local energy price indices.

The commission started its investigation in 2008 following an application for corporate leniency from Sasol on behalf of Sasol Gas.

The commission found that Sasol Gas had supplied gas to Spring Lights, but restricted the empowerment company to buying from Sasol only and selling to customers it obtained when it bought the portion of Sasol Gas, and to customers in the Durban South area. Spring Lights was restricted from selling to any customer which on-sold the gas for consumption inside or outside the area specified in the supply agreement with Sasol Gas.

The commission found that the range of agreements had effectively divided the market through the allocation of customers and territories of piped gas. Through the administration agreements Sasol Gas was paid a service fee for maintaining a database of indices and ensuring that price adjustment intervals were complied with.

These agreements had the effect of price-fixing.

Spring Lights has subsequently secured independent service providers to administer the pricing database and analyse the economic data that drives the gas price adjustments and Sasol Gas no longer provides any administrative support services.