23 August 2010 by

Sasol's abuse of dominance case settled without imposition of an administrative fine

Sasol Chemical Industries Limited (Sasol) has settled (without any admission of guilt) one of its long standing competition battles with the Commission. The settlement relates to the so-called fertilizer complaint. The fertilizer complaint initially had two aspects: the collusion part in which Sasol was fined R250 million and the abuse of dominance part which forms the subject matter of the current settlement agreement.

The absence of any admission of guilt prompted Omnia Group (Pty) Ltd (Omnia) a company which is both a customer and rival of Sasol to object to the settlement on the basis of some uncertainty in the law whether an order confirming a settlement agreement (without an admission), constitutes completed proceedings thus precluding an affected party from seeking a declaration (that the conduct constitutes a prohibited practice) and instituting a civil action for damages. Omnia argued that if the settlement is confirmed, it will not be able to bring its own application because Sasol may be able to raise a defence based on s67(2) of the Act which states, "a complaint may not be referred to the Tribunal against any firm that has been a respondent in completed proceedings before the Tribunal under the same or another section of the Act relating substantially to the same conduct".

Omnia requested the Tribunal to protect its right by either requesting the parties to insert a clause in the settlement agreement to acknowledge Omnia's right and that of third parties to submit their own complaints against Sasol, despite the conduct being substantially the same as that referred to in the settlement, or inserting the clause itself.

The Tribunal held that "the terms of a settlement agreement where a respondent does not admit liability, does not constitute a completed proceeding and hence cannot deprive a person in the position of Omnia from bringing an application for a declaration order (declaring that certain conduct amounted to a prohibited practice) or to apply for an award of civil damages, unless the consent order includes an award of damages to the complainant". Omnia's objections were therefore, dismissed and the settlement agreement was confirmed.

The conditions imposed on Sasol included a divestiture of five of its fertilizer blending facilities located across the country within 12 months after the confirmation of the settlement by the Tribunal, and a commitment by Sasol not to differentiate in its pricing of ammonium nitrate based fertilizers, other than on standard commercial terms such as volume and off-take commitments, which must be transparent and available to all consumers. The settlement agreement will be binding on Sasol for a period of 10 years after the disposal of the affected assets.

This information is published for general information purposes and is not intended to constitute legal advice. Specialist legal advice should always be sought in relation to any particular situation. Cliffe Dekker Hofmeyr will accept no responsibility for any actions taken or not taken on the basis of this publication.

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

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