Pine­town firm to pay R29m fine for price fix­ing

The Mercury - - FRONT PAGE - Bheki Mban­jwa

A PINE­TOWN-based com­pany has been fined R29.7 mil­lion by the Com­pe­ti­tion Com­mis­sion af­ter ad­mit­ting to price fix­ing and mar­ket di­vi­sion trans­gres­sions.

The Com­pe­ti­tion Com­mis­sion said NCS Resins, a resin man­u­fac­tur­ing firm, had col­luded with a Ham­mars­dale com­pany, Scott Bader, to fix the price of resins, an­cil­lar­ies and cat­a­lysts and to di­vide the mar­ket by al­lo­cat­ing cus­tomers.

An in­ves­ti­ga­tion, launched by the com­mis­sion in July last year, found that em­ploy­ees from both com­pa­nies col­luded by ex­chang­ing price and con­sumer in­for­ma­tion.

“They used this in­for­ma­tion to de­ter­mine prices at which they would sell their prod­ucts to mu­tual cus­tomers. They also used the in­for­ma­tion to de­ter­mine fu­ture price in­creases,” said com­mis­sion spokesper­son, Sipho Ng­wema.

“The com­pa­nies also agreed not to sup­ply cus­tomers who had over­due ac­counts with ei­ther or both com­pa­nies, and agreed not to tar­get each other’s po­ten­tial cus­tomers. In ad­di­tion, they agreed not to un­der­cut each other in re­spect of mu­tual cus­tomers,” he said.

Both com­pa­nies make and sup­ply polyester resin to var­i­ous in­dus­tries, such as con­struc­tion, trans­port, re­cre­ation, chem­i­cals and min­ing. Resin is a solid or liq­uid syn­thetic or­ganic poly­mer used as the ba­sis of plas­tics, ad­he­sives, var­nishes and other prod­ucts.

On its web­site, NCS says its resins are used in prod­ucts such as canopies, yachts, surf­boards, baths and pools.

Ap­pli­ca­tions

“Resin is a solid or liq­uid syn­thetic or­ganic poly­mer used as the ba­sis of plas­tics, ad­he­sives, var­nishes or other prod­ucts. NCS also man­u­fac­tures and sup­plies a wide range of gel­coats, pig­ments, pool coats, flow coats and bond­ing pastes (an­cil­lar­ies),” Ng­wema said.

NCS spokesper­son Anne Dunn said the “con­duct ap­pears to have taken place over a pe­riod of two to three years, lead­ing up to Au­gust 2016”. She added that it ap­peared it was “con­fined to a limited num­ber of in­di­vid­u­als”.

NCS has ne­go­ti­ated to pay the fine in three equal in­stal­ments, over a three-year pe­riod start­ing next month.

She said the cur­rent man­age­ment was not aware of these trans­gres­sions but when they came to light it “vol­un­tar­ily brought them to the Com­pe­ti­tion Com­mis­sion’s no­tice and agreed to work in co-oper­a­tion with the com­mis­sion’s in­ves­ti­ga­tion”.

Dunn said NCS had also launched an in­ter­nal in­ves­ti­ga­tion con­ducted by an in­de­pen­dent ex­ter­nal body.

“In ad­di­tion to launch­ing an in­ter­nal in­ves­ti­ga­tion and co-op­er­at­ing fully with the Com­pe­ti­tion Com­mis­sion, NCS has also taken sig­nif­i­cant steps to re­vise and im­prove its com­pli­ance pro­cesses by im­ple­ment­ing a more com­pre­hen­sive com­pe­ti­tion law com­pli­ance pol­icy across its en­tire oper­a­tion.

“Par­tic­i­pa­tion in this pro­gramme will be com­pul­sory for all ex­ist­ing and fu­ture em­ploy­ees.”

Dunn said the di­rec­tors and the ex­ec­u­tives deeply re­gret­ted the past con­duct and pointed out that the trans­gres­sions were com­mit­ted prior to the ap­point­ment of the cur­rent man­ag­ing di­rec­tor.

As­sur­ances

“The com­pany as­sures em­ploy­ees, cus­tomers and part­ners that NCS is com­mit­ted to con­duct­ing busi­ness eth­i­cally and re­spon­si­bly,” she said.

NCS man­ag­ing di­rec­tor Trevor I’Ons said in a state­ment: “Our in­ten­tion is to deeply em­bed a cul­ture of com­pli­ance across our or­gan­i­sa­tion to en­sure this be­hav­iour never hap­pens again.”

Asked to com­ment on the al­le­ga­tions that Scott Bader took part in the car­tel be­hav­iour, the com­pany’s man­ag­ing di­rec­tor, Badrul­dien Mo­hamed Yunus, said that it would not be ap­pro­pri­ate for the com­pany to give de­tailed re­sponses to ques­tions from The Mer­cury on the mat­ter as the process was on­go­ing.

“Suf­fice to say that Scott Bader is co-op­er­at­ing with the com­mis­sion’s in­ves­ti­ga­tion. Such be­hav­iour is en­tirely con­trary to Scott Bader’s val­ues. We are com­mit­ted to of­fer­ing the high­est qual­ity prod­ucts at com­pet­i­tive prices, in com­pli­ance with com­pe­ti­tion law,” Yunus said.

Pro­fes­sor Bonke Du­misa, an econ­o­mist, said that the con­sumer was prej­u­diced by price fix­ing.

“Un­der nor­mal cir­cum­stances, where there is fair com­pe­ti­tion, prices tend to be lower as com­pa­nies try to use the price as a com­pet­i­tive tool through which to sell their prod­ucts,” said Du­misa, also a mem­ber and for­mer deputy chair­per­son of the Na­tional Con­sumer Tri­bunal.

He added that there were more un­re­lated cases of car­tel be­hav­iour be­ing in­ves­ti­gated by the Com­pe­ti­tion Com­mis­sion. This was be­cause South Africans had be­come more aware of com­pe­ti­tion laws, and more cases were be­ing re­ported.

Du­misa ex­plained that the com­mis­sion was the in­ves­tiga­tive and en­force­ment agency, while the tri­bunal had ad­ju­dica­tive pow­ers.

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