Case Alert: Outcome of matters decided by the Tribunal - 17 September 2024

The Competition Tribunal (“Tribunal”) confirmed a settlement agreement whereby Vita Gas (Pty) Ltd (“Vita Gas”) agreed, among others, not to enter into any long-term exclusive use agreements for the use of the liquefied petroleum gas (“LPG”) import and storage facility located in the Port of Saldanha Bay, in the Western Cape (“the LPG Terminal”), owned and operated by Sunrise Energy (Pty) Ltd (“Sunrise”) for a period of five years from the date of confirmation of the settlement agreement.

This matter emanated from a complaint by Sunrise which alleged that the provisions of a “Throughput Agreement” between it and Vita Gas allowed Vita Gas to engage in exclusionary conduct that prevented Sunrise from entering into agreements with other LPG aggregators. The Competition Commission (“Commission”) investigated and referred the complaint to the Tribunal for determination.

This settlement agreement, confirmed as an order by the Tribunal, concludes all proceedings in respect of the complaint. The full terms of the settlement agreement can be accessed at: https://www.comptrib.co.za/case-detail/20841

Background

The investigation found, among others, that the Throughput Agreement covered almost all available LPG import terminal services and facilities in the Western Cape from March 2018 until October 2022, as Sunrise was the main LPG terminal operator in the Western Cape at the time – and that the remaining throughput capacity at the LPG Terminal, available to third parties or LPG aggregators, was rendered meaningless by the terms of the Throughput Agreement. In addition, the Commission considered that the effect of the Throughput Agreement was that Vita Gas’ competitors and potential competitors were unable to import LPG through the terminal in quantities and at prices that would enable them to enter into, participate in, or expand in the market for the supply of LPG from import terminals and refineries in the Western Cape. Further, that the Throughput Agreement enhanced and maintained Vita Gas’ market dominance, was likely to significantly limit its competitors and was likely to result in consumer harm.

The Commission found that Vita Gas’ alleged conduct constituted anti-competitive conduct in contravention of section 8(d)(i) and 8(1)(d)(i), alternatively 8(c) and 8(1)(c) of the Competition Act (“the Act”). Vita Gas denied contravening the Act. It later informed the Commission that it had terminated the Throughput Agreement concluded with Sunrise in respect of the LPG Terminal.

After considering the terms of the agreement and deliberating on the matter, the Tribunal confirmed the settlement agreement.

The Tribunal confirmed a consent order in which a Gauteng manufacturer of steel roofing and roofing accessories agreed to abide by appropriate terms that seek to promote competition and the availability of materials for use in producing and installing solar panels, and to resolve concerns raised by an American firm in relation to the supply of roofing products used to install solar panels.

Investigation and findings

Metal Roof Innovations Ltd, operating as S-5! in Colorado, USA, alleged that Global Roofing Solutions (“GRS”), which operates in Gauteng, (i) is a dominant firm in the market for the supply of standing seam and concealed fix roofing products; and (ii) has contravened sections 8(1)(d)(i) and/or section 8(1)(c) of the Act i.e. abused its dominance by requiring customers to use GRS’ solar panel mounting clamps when installing solar panels in order to benefit from a 15-year warranty (which covers issues like roof perforation or paint fading) when GRS supplies concealed fix and standing seem roofing to consumers in South Africa. Metal Roof Innovations alleged that, as a result of GRS’ warranty conditions, it is excluded from supplying mounting clamps to customers who use GRS’ roofing products. GRS denied the allegations.

The Commission investigated the complaint and did not find that GRS is a dominant firm in the relevant market or that it had contravened the Act. It found that some suppliers of solar mounting clamps had been unable to supply their own clamps for projects in which GRS had suppled roofing products, as customers preferred GRS clamps. They did this to ensure that the GRS warranty in respect of its products would not be negatively impacted. In addition, several suppliers attempted to get their clamps pre-approved by GRS for use with GRS products. GRS reviewed several test reports and could not pre-approve the clamps as they were of poor quality and did not meet technical requirements. It was also found that GRS did not intend to manufacture and sell the solar PV mounting brackets exclusively as it was willing to test, co-develop and approve some third-party developed brackets in the past.

Settlement

GRS was willing to cooperate in resolving the concerns raised by Metal Roof Innovations and was invited to settle the complaint by agreeing to appropriate terms. Among others, GRS will not invalidate the warranty on its standing seam and concealed fix roofing products solely because third-party solar clamps are used. However, it retains the right to deny warranty claims if any deterioration or failure of products it supplied is caused by third-party clamps that do not meet its technical and material standards or installation methods. After considering the terms of the agreement and deliberating on the matter, the Tribunal confirmed the consent order.

A Dutch firm that designs and sells inverters, chargers and related power conversion products agreed to pay a R14 232 581 administrative penalty, in settlement of a complaint referral in which it was accused of allegedly contravening section 5(2) of the Act which prohibits the practice of minimum resale price maintenance. The matter relates to Victron products sold by online stores to end users in South Africa.

The administrative penalty forms part of the terms of a settlement agreement which was confirmed as an order by the Tribunal. Among others, Victron Energy B.V. (“Victron”) agreed to develop, implement and monitor a competition law compliance programme incorporating corporate governance, designed to ensure that its employees, management, directors and agents involved in any commercial activities in South Africa do not engage in future contraventions of the Act. The full terms of the settlement agreement can be accessed at https://www.comptrib.co.za/case-detail/20840

Issued by:

Gillian de Gouveia, Communications Manager

On behalf of the Competition Tribunal of South Africa

Cell: +27 (0) 82 410 1195

E-Mail: GillianD@comptrib.co.za

Twitter: @comptrib