Sasol seeks deal on cartel action

SASOL has gone cap in hand to the SA competition commission to make leniency applications – an industry form of plea bargaining – after it uncovered evidence of price-fixing and market allocation in various business units during an internal review.

This strategy will place the authority’s cartel probe spotlight on companies from which Sasol – the fuel-from-coal parastatal that was privatised during the apartheid era – receives raw materials and to which it supplies fuel and chemicals.
Sasol said yesterday that chief executive Pat Davies and his management team had initiated a competition law compliance review of all Sasol businesses last July. The review was commissioned after Sasol’s alleged involvement in a wax cartel came to light.
‘The intense scrutiny of the review initiated last year is unfortunately indicating areas of concern,’ said Davies.
Competition commission chief economist Simon Roberts explained that leniency applications allowed members of alleged cartels for tender rigging or price-fixing to offer the commission information enabling it to prosecute other members of the cartel. This could qualify the applicant – in this case Sasol – for exclusion from prosecution.
Cartel behaviour carries a maximum fine of 10 per cent of turnover in a relevant business.
If the competition tribunal granted the applicant immunity from prosecution, the applicant would pay no fines, Roberts explained. Sasol said it was co-operating with the commission’s investigations.
The company has disclosed unlawful conduct in terms of the Competition Act regarding its phosphoric acid business, conducted through Sasol Nitro, a division of Sasol Chemical Industries. The commission reported that Durban-based Nutriflo had put in a complaint six years ago accusing Sasol Nitro, along with Yara South Africa (previously known as Kynoch) and Omnia Fertiliser, of contravening section 4 of the Competition Act.
Omnia provided Sasol with nutrients in fertiliser, while Yara used products supplied by Sasol.
Nandi Mokoena, the commission’s strategy and stakeholder relations manager, explained that a leniency application was a little different to a plea bargain in a court as it normally involved a guilty party that was offered a reduction in sanctions, subject to co-operating with the prosecution process. However, in the case of a leniency application, the commission was likely not to know about the wrongdoing.
Commission spokesperson Zenzi Dlamini said the authority had initiated a complaint of anti-competitive conduct on the part of Foskor – a state-owned firm – and Sasol Nitro in 2007. It was alleged that the two had colluded ‘to divide the phosphoric acid market between themselves’ in violation of the Competition Act. This also followed a leniency application.
The commission is also probing alleged cartel conduct in the supply and pricing of piped gas. Sasol Gas made leniency applications.
Egoli Gas, which supplies about 12 000 homes in Gauteng; Spring Lights Gas, which is owned by Sasol and black empowerment interests; and Coal Energy and Power Resources are also being probed.
Spring Lights Gas said it would prefer not to comment ‘any further’ as the matter was sub judice. ‘All the company knows is what is contained on Sasol’s website.’
The commission will probe anti-competitive conduct in a range of other products in the petroleum value chain. It will look into the activities of past and present members of the SA Petroleum Industry Association and the Southern African Bitumen and Tar Association.
Mokoena noted that these included Shell, BP, Caltex, Engen, Castrol, Afric Oil, Zenex, Pepco and PetroSA, the oil-from-gas parastatal. -Business Report