MOSCOW (MRC) -- SASOL subsidiary Sasol Chemical Industries (SCI) has been fined an administrative penalty of R534m by the Competition Tribunal for excessive pricing, said Bdlive.
The fine, for the pricing of purified propylene and polypropylene over a period of four years beginning in January 2004, could mark the end of the long-running matter. This is the first case of excessive pricing brought by the Competition Commission itself.
The first excessive pricing case was brought in 2009, when a Competition Tribunal decision over excessive pricing by steel maker ArcelorMittal was reversed by the Competition Appeal Court. In the ArcelorMittal matter, the miner settled with Harmony and Durban Roodepoort Deep, which had lodged the complaint, and the case never went back to the tribunal. The settlement — coming after the initial fine of R691.8m — was never disclosed.
In addition to penalising SCI, the tribunal also determined a method how the company should price these products in future. In its ruling, the tribunal said the prices SCI charged Safripol - its only external customer for purified propylene - was to Safripol’s detriment and inhibited its ability to effectively compete with SCI.
The Competition Commission had argued that SCI's position as a low-cost producer should have been reflected in its prices and that because of its local dominance, SCI was enjoying higher profit margins on both these products than on any of its other products, and rivals were not able to constrain SCI’s pricing.
The tribunal concluded that SCI’s exercise of market power and its excessive prices had resulted in a missed opportunity for innovation and development for the domestic manufacture of downstream plastic goods.
As MRC wrote before, Sasol Chemicals North America and INEOS Olefins & Polymers announced Monday that they have reached final investment decision to form a joint venture to build a high-density polyethylene (HDPE) plant in La Porte.
Sasol Limited is an integrated energy and chemical company based in Johannesburg, South Africa. It develops and commercialises technologies, including synthetic fuels technologies, and produces different liquid fuels, chemicals and electricity.
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