19 April 2010 by

Oil industry bust for colluding on bitumen, obtains exemption for World Cup coordination

The Commission is proceeding to prosecute a complaint that major oil companies had colluded in respect of bitumen pricing.

The Commission alleges that firms have, through meetings convened by the industry body (SABITA), correspondence through SABITA, and direct communication with each other, agreed on a price adjustment mechanism relating to a wholesale reference price for bitumen. This according to the Commission resulted in customers being charged prices that were not competitively determined.

Bitumen is a by-product of the refining process which is used in road construction; and although road builders were involved in discussions, the prosecution relates to the oil companies only.

In referring its findings to the Tribunal, the Commission has proved consistent in its policy of requesting an administrative penalty based on 10% of each respondent's total group turnover, rather than limiting the fine to turnover in the affected (bitumen) market only. The Commission does not seek a fine against Sasol and its subsidiary Tosas, these firms having been granted leniency for their part in reporting the conduct to the Commission.

In a different matter, the Commission has temporarily granted fuel producers an exemption from certain provisions of the Act in order to ensure supply of petroleum products during the FIFA World Cup. In essence the exemption will revive joint planning and co-operation between petroleum companies by allowing them to discuss logistic planning, pipeline operations and shipping. The temporary exemption will expire in August 2010. The fuel firms had initially applied for an exemption up to 2015 and intend to reapply for an exemption up to 2015.

Chris Charter, Director, Competition
Scarlate Nkiwane, Associate, Competition

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