MOSCOW (MRC) -- The Competition Tribunal found Sasol Chemical Industries Limited, a subsidiary of Sasol Ltd., guilty of charging domestic customers excessive prices for purified propylene and polypropylene between January 2004 and December 2007, as per politicsweb.co.za
The Tribunal stated that the price SCI charged Safripol, SCI’s only external customer for purified propylene and a competitor of SCI downstream, was to Safripol’s detriment and inhibited its ability to effectively compete with SCI. In addition, SCI’s locally charged polypropylene prices have had a significant adverse effect on the local plastic converters and caused them harm during the complaint period.
The Tribunal imposed a penalty of R205.2 million in the case of purified propylene and R328.8 million in respect of polypropylene. It also imposed remedies for determining SCI’s future pricing of both purified propylene and polypropylene that would see SCI’s prices charged to local customers drop.
Purified propylene, produced from feedstock propylene, is an input in the production of polypropylene.
The Tribunal’s finding comes after a lengthy hearing into allegations of excessive pricing brought by the Competition Commission against SCI. The hearing ran over several months, starting on 13 May 2013, with final submissions in the case being made on 09 May 2014. In its complaint the Commission alleged that SCI was a dominant market player and that, between 2004 and 2007, it had charged excessive prices for purified propylene and polypropylene to the detriment of consumers and in contravention of the Competition Act. SCI denied the allegations. During the proceedings the Tribunal heard the evidence and testimony of 13 witnesses including 8 experts comprising industry, financial and economic experts on both sides.
Because of Sasol Synfuels’ low feedstock propylene costs, SCI is a low cost producer of purified propylene and one of the lowest cost polypropylene producers in the world. SCI argued in the hearing that the Tribunal should ignore this cost advantage in arriving at its decision while the Commission argued that the cost advantage should be taken into account.
As MRC informed earlier, Sasol, the world’s biggest producer of liquid fuels from coal, said full-year profit fell as much as 19%, less than analysts estimated, after oil prices declined. The stock rose the most in more than three months. Earnings per share excluding one-time items probably declined by as much as 11.43 rand (90 US cents) in the year to June 30.
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.