23 August 2010 by

Second settlement in the scrap metal complaint

In April 2008, The New Reclamation Group (Pty) Ltd (Reclam) paid a fine in the amount of R145 972 065 for price fixing, market allocation and exclusive dealing in relation to ferrous and non-ferrous scrap metal. The Commission became aware of the prohibited conduct from documents filed by Reclam in merger proceedings where Reclam proposed to acquire SAM and its associated company Waste Control (Pty) Ltd. The Commission initiated a complaint against Reclam and its competitors and subsequently raided the offices of Reclam. 

Following the raid, the Commission uncovered further potential violations of the Act by Reclam, and its competitors including Power Metals Recyclers (Pty) Limited (Power Metals) and initiated a second complaint. The crux of the second complaint was that the respondents engaged in a buying cartel, in that they all agreed to maximum buying levels for various types of scrap metal/steel sold at auctions or in the open market. As well as issuing a price list in late 2003 in respect of Gauteng buying prices. In addition, the respondents allegedly appointed a selling committee whose responsibility was to set prices at which Greystone (a joint venture set up by the respondents) was willing to pay to the shareholders for the various classes of non-ferrous scrap sold by the shareholders to Greystone. The selling committee also determined the prices at which various classes of non-ferrous scrap would from time to time be sold. The joint venture was subsequently dissolved in 2004 but the Commission found that the members continued to discuss buying levels on an informal basis until at least 29 May 2007.

Power Metal is the second firm since Reclam to be fined. It has agreed to pay an administrative penalty of R12, 773,587.55 constituting 5% of its annual turnover for the year ended February 2006.

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

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