Nortons Inc. March 2014 eBrief

5 March 2014|In Competition Briefs eBriefs

In this edition:

LOCAL

  • Swaziland Competition Commission conditionally approves merger between bakeries
  • South African Competition Commission recommends unconditional approval of AFGRI merger
  • African Antitrust – highlights
  • Competition Commission appoints Head of Mergers and Acquisitions

INTERNATIONAL

  • Canada: Panasonic fined for bid rigging of auto-parts
  • Malaysia: Ice manufacturers fined in Malaysian Commission
  • EU: Ireland referred to European Court of Justice
  • Germany: Sugar Cartel fined by German Federal Cartel Office
  • Brazil: Medical suppliers targeted by Brazil
  • Israel: Israel first administrative fine on the horizon
  • Norway: Record fine in relation to asphalt cartel fine reduced
  • France: Sports newspaper removes its opponent from the competition
  • Spain: Spanish chauffeured car proposal criticised

Swaziland Competition Commission conditionally approves merger between bakeries

The Competition Commission of Swaziland (“Competition Commission”) has recently conditionally approved a transaction in terms of which Premier Swazi Bakeries (Pty) Ltd (“PSB”) (which is controlled by Premier Foods (Pty) Ltd) acquired certain assets and business activities within Ngwane Mills (Pty) Ltd (“Ngwane”), specifically those assets and business activities concerned with the production, sale and distribution of maize and wheat milled products, and the sale and distribution of value added products.

PSB is active in baking and the wholesale supply of white and brown bread and confectionary primarily within Swaziland and Ngwane is active in the milling and wholesale supply of wheat flour and maize within Swaziland.

Despite the transaction facing opposition within Swaziland (this included Universal Milling, a competitor of Ngwane, intervening in the merger proceedings, and launching High Court litigation to suspend the implementation of the merger, as well as seeking to have the Swaziland Competition Commission prohibit or impose more stringent conditions on the merger, the merging parties succeeded in having the transaction conditionally approved.

Nortons Inc represented the merging parties throughout the proceedings.


South Africa Commission recommends unconditional approval of AFGRI merger 

The Competition Commission (“the Commission”) of South Africa has recently recommended that the merger between AgriGroupe and AFGRI be unconditionally approved by the Competition Tribunal.

The Commission alleges that AgriGroupe’s acquisition of AFGRI will not present any competitive overlap, as neither AgriGroupe nor its controlling company, Joseph Investment Holdings, offer any products or services in the South African market that the Commission considered to be similar and interchangeable to those offered by AFGRI in South Africa. The Commission has stated that the proposed merger will not substantially prevent or lessen competition in the agricultural commodities, storage, trading and other related markets.

Various government departments, however, had voiced their concern that should the merger be approved, AgriGroupe would potentially increase the storage costs for grain, as it will own the majority of silos in various provinces, and that AgriGroupe would potentially export grain to other countries and increase the price of grain in South Africa.

The African Farmers’ Association of South Africa, the South African Communist Party and the National African Farmers’ Union raised a variety of public interest concerns that merger will have a negative effect on farmers and in particular black farmers.

The Commission did not agree that the post-merger concerns would necessarily occur or would have negative effect on the industry and that there are no grounds to believe that the merger would result in a negative effect for farmers or black farmers. The Commission indicated that there is sufficient spare capacity in silos that it is unlikely that farmers will be excluded from use of the silos.

AFGRI currently provides assistance and loans to small farmers, which the Commission believes will continue by AgriGroupe should the merger be approved.

It remains to be seen whether the above groups will seek to intervene before the Competition Tribunal on the basis of the contentious public interest criteria as set out in the Competition Act. There have been a series of mergers which have been conditionally approved on the basis of the public interest criteria.


For regular updates in relation to African antitrust please visit: www.africanantitrust.com

African Anti-trust logoAFRICAN ANTITRUST” PROVIDES UP-TO-DATE INFORMATION ON COMPETITION LAW AND RELATED LEGAL & ECONOMIC DEVELOPMENTS ACROSS THE ENTIRE AFRICAN CONTINENT.

IT HAS BEEN THE PRE-EMINENT RESOURCE IN THIS FIELD SINCE ITS INCEPTION IN JANUARY 2012.

AAT has launched a new series analysing the important issue of innovation and antitrust. Read it online at www.africanantitrust.com


Competition Commission appoints Head of Mergers and Acquisitions 

The Competition Commission has appointed Hardin Ratshisusu as the Divisional Manager of its Mergers and Acquisitions division with effect from the 1st of March 2014. Ratshisusu will take over from Ibrahim Bah who left the Commission in December 2013.

Ratshisusu has worked for the Commission for a cumulative period of over nine years, having joined the Mergers and Acquisitions Division in 2004. He held various positions including many years as a merger analyst and has acted as head of mergers from time to time. He has also previously worked at Neotel’s regulatory division and most recently as a regulatory economics consultant.

Ratshisusu holds a BCom (Hons) from the University of Venda, a MCom (Economics) from the University of the Witwatersrand and an MBL from the University of South Africa.

“I am pleased that we have now completed the task of filling all vacancies for the heads of the Commission’s core divisions. This will allow us to focus on fulfilling our strategic priorities”, said the ActingCommissioner Tembinkosi Bonakele.


INTERNATIONAL


Canada: Panasonic fined for bid rigging of auto-parts

Canada’s Superior Court in Ontario has issued a fine of €3.1 million against Panasonic for their role in the rigging of bids relating to the supply of automobile parts to Canada’s branch of Toyota following an investigation by Canada’s Competition Bureau initiated in December 2009.

The Ontario Superior Court held that Panasonic had been involved in a coordinated practice with other competitors to agree on which competitor would win a contract to supply parts to Toyota. Panasonic pleaded guilty to two counts of bid rigging.

The investigation of Panasonic by the Canadian Competition Bureau is part of larger investigation into various car parts cartels. The Superior Court of Quebec has recently issued a €3 million fine against a ball bearings manufacturer for their role in a bid-rigging agreement.


Malaysia: Ice manufacturers fined in Malaysian Commission

In only the second cartel fine issued by Malaysia’s Competition Commission (“MCC”), twenty-six ice manufacturers in the country have been provisionally fined for price fixing. The €63,000 fine was issued after the MCC found that the ice companies colluded to fix the price of ice cubes and ice blocks.

The investigation was launched in December 2013 following adverts in various newspapers announcing that the ice manufacturers would be raising their prices.

The fines are well below the ten per cent maximum of annual turnover that the MCC is permitted to issue against infringing companies, but the MCC took into account whether the companies elected to cooperated during the investigation. The ice makers have thirty days to respond to the MCC’s provisional fine.


EU: Ireland referred to European Court of Justice

Ireland has been referred to the European Court of Justice by the European Commission for its failure to implement strategies that would increase competition in the energy market. The 2009 directive issued by the European Union aimed to level the playing field for all producers in the electricity market and ensure that the energy market does not operate in an anti-competitive manner.

The European Commission claims that despite issuing three official reminders to Ireland, the country has failed to implement the directive fully. Ireland has implemented a large number of the rules set out in the directive but has failed to ensure a separation of the supply and production of energy from the distribution of energy.

The Commission has recommended that if the European Court of Justice finds Ireland has failed to implement the directive adequately, Ireland should be ordered to pay a €20,000 fine per day from the date of judgment until the country complies fully with the directive. The recommended fine was determined after considering the duration and gravity of the failure to adhere to the directive, as well as Ireland’s GDP.

Bulgaria, Estonia, Finland, Poland, Romania, Slovenia and the UK have all also been referred to the European Court of Justice for their failure to properly implement the directive


Germany: Sugar Cartel fined by German Federal Cartel Office

Germany’s Federal Cartel Office has fined three sugar companies, Pfeifer & Langen, Südzucker and Nordzucker, €280 million for their role in a cartel that divided up the country’s geographic market for sugar and spanned from the mid-1990s until 2009.

The cartel related to both sugar for industrial purposes and sugar for consumers. It is believed that the European sugar market rules imposing quotas and minimum prices help to ensure that the cartel remained concealed.

Germany’s Federal Cartel Office believes that directors and employees of the sugar companies met regularly in order to fix prices and discuss sensitive matters such as quota allocation. The sugar companies have alleged that the state colluded in the cartel, but so far there has not been any reliable evidence to support this. Nordzucker received the most lenient fine for their cooperation with the Cartel Office.


Brazil: Medical suppliers targeted by Brazil

Charges have been brought by Brazil’s Administrative Council for Economic Defence for the alleged rigging of government tenders by manufacturers of orthopaedic equipment and by its trade association. The trade association allegedly created and distributed information to the manufacturers relating to recommended prices for orthopaedic equipment.

The investigation commenced after it was found that two companies submitted identical tender documents. The subsequent investigation by the Brazilian Authority found that eleven manufacturers were involved and that the business would agree on which party would win the tender.

The matter has been passed to Brazil’s Administrative Council for Economic Defence’s cartel tribunal who will determine whether the parties will be liable to pay fines of up to twenty per cent of annual turnover.


Israel: Israel’s first administrative fine on the horizon

Israel’s Antitrust Authority will be issuing its first administrative fines after receiving the authority to issue such fines in May 2012. The first administrative fine will be issued for abuse of dominance in the import of automobiles into the country.

The port of Ashdod, an executive of the company and a former chief executive will be attending a hearing prior to Israel’s Antitrust Authority deciding whether to impose fines of €2.5 million on the port and €42,000 each on the two company executives. It is hoped that if these fines are imposed on the parties, it will act as a significant deterrent.

The authority has alleged that the port prevented the only other container port on Israel’s coast from being able to enter the car import market. Israel imports all of its cars into the country, and Israel’s Antitrust Authority believes that the port’s conduct is monopolistic.


Norway: Record fine in relation to asphalt cartel fine reduced

The District Court of Oslo has overturned a record breaking fine handed down by the Norwegian Competition Authority. The fine of €16.7 million imposed in March 2013 on the Norwegian road construction company, NCC, for its participation in a three year long asphalt cartel has been reduced to €4.8 million.

The District Court of Oslo upheld the Norwegian Competition Authorities decision that the conduct of NCC infringed EU law and that the road construction company is liable for the actions of one of its employees, the District Court did not believe that the extremely high fines were warranted and reduced the penalty by almost seventy-five percent.

Norwegian Competition Authority has stated that it is considering appealing the decision of the District Court as it does not believe that the fines are high enough to curtail cartel behaviour.


France: Sports newspaper removes its opponent from the competition

The French Competition Authority has issued a €3.5 million fine to publisher Éditions Philippe Amaury for removing a rival sports newspaper, 10Sport, from the market and abusing its dominant position.

Two weeks after the new publication 10Sport was to be launched at half the price of its rival newspaper, the publishers Éditions Philippe Amaury announced that it would be launching its own rival daily newspaper. The French Competition Authority found documents that indicated that Éditions Philippe Amaury intended to remove 10Sport from the market.

During its investigation, the French Competition Authority uncovered that Éditions Philippe Amaury put pressure on advertisers and ran its rival sports paper at a loss. The publisher, who also runs the Tour de France, received a fine reduction as it is currently in financial trouble.


Spain: Spanish chauffeured car proposal criticised

Spain’s Competition and Markets Authority has published a report that makes three major criticisms of a government bill to regulate chauffeured car companies. The Spanish Authority has stated that the bill is anti-competitive.

The Spanish Authority believes that if the bill requires a minimum number of cars, drivers and garages before a company can trade it creates barriers to entry that are too high. The Spanish Authority goes on to state that the bill allows local authorities to determine the number of companies that are allowed to operate in the market, which could result in market allocation. The Spanish Authority also criticised the bill’s requirement that licences be issued locally as it will further compartmentalise the market.

The Government requested that the Authority make recommendations but does not have to strictly adhere to them.