The Competition Commission of South Africa announced on Tuesday that it has reached settlement agreements with two major oil companies, namely Engen Petroleum Limited (Engen) and Shell South Africa Marketing (Pty) Limited (Shell) in which they admit to having fixed the price of bitumen with other oil companies.
The commission said the two companies did so by collectively determining and agreeing on pricing principles, including a starting reference price and monthly price adjustment mechanism. Engen has agreed to pay a penalty of R28,8m and Shell has agreed to pay R 26.3m.
These settlement agreements follow the Commissions referral on 04 March 2010 of its findings against the Southern Africa Bitumen Association (SABITA) and seven major oil companies namely, Chevron SA (Pty) Ltd, Engen, Shell, Total SA (PTY) Ltd, Masana Petroleum Solutions (Pty) Ltd, Sasol Limited and Tosas (Pty) Ltd to the Tribunal for adjudication, it said in a statement.
It further stated that it did not seek a penalty from Sasol and its subsidiary, Tosas, which were granted conditional immunity following the leniency application filed with the Commission by Sasol on 12 January 2009.
Subsequent to the referral, the Commission previously concluded settlement agreements with Masana and SABITA in 2010 and 2011, respectively.
Bitumen is one of the by-products from crude oil refining. Bitumen and modified bitumen products are used to surface and rehabilitate roads, as waterproofing products and to suppress dust. The end customer of bitumen is mainly government road agencies and municipalities.
This case was initiated following information received from Sasol and its subsidiary Tosas in the leniency application. In its investigation the Commission found that the oil companies entered into an agreement and engaged in collusive conduct from around 2000 until at least December 2009.
The conduct included the exchange of competitively sensitive information relating to the pricing of bitumen and associated products, and the use of an agreed pricing formula to set the wholesale list selling price of bitumen. This was facilitated through meetings convened by the industry association, SABITA, as well as correspondence through SABITA and direct communication between oil companies, it said.
The Commission has filed these agreements with the Tribunal and awaits set down for confirmation as orders of the Tribunal.
Shell Price Fixing
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