SASOL could face civil action from Grain SA and agricultural union TAU SA before the end of the year as farmers demand compensation for Sasol’s price-fixing activities because they had suffered the most.
Corne Louw, a senior economist at Grain SA, confirmed that TAU SA and Grain SA were thinking about a civil action against Sasol.
‘The two bodies have been in talks to see how they can launch this together.’
According to Grain SA figures presented at a competition tribunal hearing on Tuesday, grain and oil seed producers spent N$3,4 billion on fertiliser in the 2004/05 crop season alone. If uncompetitive practices had caused a five per cent increase in fertiliser costs in that season, this would have added N$170 million to farmers’ bills.
Pat Davies, Sasol’s chief executive, admitted that the company was expecting civil claims after it agreed to pay an increased fine of N$251 million for breaking anti-collusion rules. ‘But we do not know whether there will be a class action against us.’ He denied that the company faced further investigations in other countries.
Sasol has more than 200 subsidiaries in all major regions of the world, and about 34 000 employees internationally.
Nico Hawkins, the manager of industrial services at Grain SA, told the tribunal that Grain SA and TAU SA would welcome compensation for producers affected by Sasol’s practices.
Fertiliser was the biggest contributor to the production costs of grain and oil seeds, he said. ‘The profitability of grain and oil seeds is therefore sensitive to changes in the fertiliser price. Farmers are price takers and have to absorb most of the increases themselves.
‘If the cost of production increases disproportionately to the price of the grain or oil seeds, farmers are forced to cease production or face going out of business.’
Chris van Zyl, the deputy general manager at TAU SA, said the state would be the beneficiary of the N$251 million fine imposed on Sasol. ‘We propose that some form of compensation to farmers be considered.’
David Lewis, the chairman of the competition tribunal, encouraged the groups to seek compensation. ‘You have the right to pursue this further. But I doubt whether you will be compensated. Go and do what you have to do.’
-Business Report
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