6 July 2015 by Cliffe Dekker Hofmeyr Competition Matters

Competition Commission refers piping cartel to the Competition Tribunal

On 25 May 2015, the Competition Commission referred a case of collusion against various pipe manufacturers to the Competition Tribunal for adjudication in terms of s50(1) of the Competition Act, No 89 of 1998 (Act).

The Commission alleges that in April 2007, Dawn Consolidated Holdings Proprietary Limited (Dawn) and Sangio Pipes Proprietary Limited (Sangio) concluded a shareholders agreement, in terms of which, Dawn and its subsidiaries, DPI Plastics Proprietary Limited and Ubuntu Plastics Proprietary Limited undertook not to manufacture any form of high density polyethylene (HDPE) piping, other than corrugated HDPE piping throughout South Africa. Moreover, Dawn and its subsidiaries were further obliged to purchase all of their HDPE piping requirements directly from Sangio. The shareholders agreement allegedly had the effect of dividing the market by allocating specific types of goods to Dawn (corrugated HDPE piping) and Sangio (regular HDPE piping), allegedly in contravention of s4(1)(b)(ii) of the Act.

Agreements of this nature are outright prohibited without the possibility of justifying them on pro-competitive, technological or efficiency grounds and attract an administrative penalty not exceeding 10% of the firm's annual turnover in South Africa.

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