Competition Commission clarifies what industry bodies can and can’t talk about

While the South African Milk Processors’ Organisation (Sampro) recently received word from the Competition Commission that the information it exchanges with members doesn’t fall foul of the Competition Act, other industry bodies weren’t as lucky.

The Animal Feed Manufacturers Association (AFMA), the South African Poultry Association (SAPA) and the Fertiliser Society of South Africa (FSSA), are all currently under investigation. Oupa Bodibe, Competition Commission advocacy and stakeholder relations manager, explained where bodies like these are going wrong.

“In terms of the Act, you can’t exchange information about prices and average prices over time, cost, market penetration and other commercial information that makes it possible for competitors to see volumes, pricing, customers and regions of operations.”

This kind of information exchange, he added, allows for the formation of cartels. Industry associations aren’t illegal by nature. “What is illegal is when they stick together to coordinate the responses and activities of the market. As long as they aren’t talking about those things, they can continue to meet,” said Bodibe.

Sampro CEO Alwyn Kraamwinkel said they had taken numerous steps to ensure their activities promoted effective competition and had asked the Commission if the pricing and volume information they disseminated to members contravened the Competition Act. In November, the Commission responded by saying Sampro’s activities didn’t facilitate anti-competitive behaviour and weren’t in conflict with the Act.

But it’s a different story with the fertiliser industry and the Commission is conducting searches of the premises of dolomitic and calcitic agricultural lime manufacturers and suppliers. They’re looking for information that can be used in their investigation into retail price maintenance, price fixing and market allocation. The companies involved are H. Pistorius & Co, Kalkor, Plaaslike Boeredienste and Grasland Ondernemings, all in Gauteng and the North West. Meanwhile, a wide-reaching investigation into the poultry industry placed industry bodies SAPA and AFMA on the Commission’s radar.

In September 2009, the Commission initiated complaints against all past and present members of AFMA, SAPA and other players involved in poultry feed production, in breeding stock and broiler production, and in the poultry products industry. “It’s a fishing expedition,” said Astral Foods CEO Chris Schutte. “The last submissions were made in February and as we sit, we haven’t heard anything more.

They’ll probably analyse the information and see if there’s any major anti-competitive behaviour.” He said the investigation has nothing to do with price-fixing or the consumer.The group has also been accused of uncompetitive behaviour with Western Cape’s Elite Breeding Farms in 2008 – a charge Astral’s opposing. “They regard one off-take agreement as maybe being on the dangerous side of anti-competitive behaviour,” explained Schutte. The case will go before the Competition Tribunal in August next and he’s confident of the outcome, he added.