Oil majors fixing prices as recently as December 2009

SOUTH Africa’s Competition Commission has said its investigations into price fixing in the supply of bitumen has revealed that oil majors engaged in collusive conduct as recently as December 2009.

Oil majors including Chevron SA, Engen, Shell SA, Total SA, Masana Petroleum Solution, the Southern African Bitumen Association (Sabita), Sasol and Tosas were said to be collectively determining and agreeing on pricing principles, including a starting reference price and monthly price adjustment mechanism.Bitumen is a residual fraction of crude oil. Bitumen and modified bitumen products are mainly used in road construction to tar and rehabilitate roads, which is mainly sold to government entities.The Commission initiated an investigation into competition violations by these companies in 2009, following an application for leniency by Sasol and its subsidiary Tosas.In its application Sasol admitted that together with its subsidiary, Tosas, it had colluded with its competitors and was granted conditional immunity from prosecution provided it cooperates with the Commission in its investigation and prosecution.’In its investigation the Commission found that the respondents engaged in collusive conduct from around 2000 until at least December 2009,’ the Commission said in a statement to the JSE.It said companies’ activities were facilitated through meetings convened by Sabita, as well as through correspondence through Sabita and direct communication between oil companies.’The conduct resulted in final customers being charged prices which were not competitively determined,’ said the Commission.All of the respondents compete in the supply of bitumen and bituminous products.They are also suppliers of a range of other petroleum products.’The uncovering of the cartel is another important step in the Commission’s work in addressing anti-competitive conduct affecting infrastructure development,’ said commissioner Shan Ramburuth.The Commission has now referred its price fixing findings against major oil companies to the Competition Tribunal for adjudication.It has also asked the Tribunal to impose an administrative penalty of 10 per cent on each of the firms involved, except for Sasol and Tosas.Settlement terms have been agreed in principle with Masana whereby Masana admits guilt and will pay an administrative penalty of N$13 million, said the Commission.The settlement agreement will be referred to the Tribunal for confirmation shortly, it said. – Business Report