Competition Commission investigation into price fixing and collusion by PG Bison (Pty) Ltd (“PG Bison”), a subsidiary of KAP Industrial Holdings Ltd (“KAP”)

6 February 2020

In March 2016, the Competition Commission of South Africa (the “Commission”) initiated a complaint of price fixing against PG Bison and Sonae Arauco South Africa (Pty) Ltd (“Sonae”) and commenced its investigation with a dawn raid during which it seized certain documents and information.

As a result of ongoing and extensive internal investigations, PG Bison discovered certain conduct which it considered may have been in contravention of the Competition Act, 89 of 1998. Not only was this conduct unknown to the PG Bison and KAP boards and executive management, but it was also unauthorised and in absolute contravention of the KAP code of ethics and culture

PG Bison immediately notified the Commission of this information through the Commission’s corporate leniency policy (“CLP”) and, in April 2018, applied to the Commission for immunity against prosecution. The CLP requires full disclosure and cooperation by the immunity applicant as well as absolute secrecy about the existence of the immunity application.

PG Bison cooperated fully with the Commission’s investigation. On numerous occasions, the Commission indicated that its investigation was ongoing and that it was yet to decide whether or not to grant PG Bison immunity. Throughout PG Bison was careful to maintain the secrecy of its immunity application as required by the CLP.

In March 2019, unbeknownst to PG Bison and KAP, the Commission concluded a settlement agreement with Sonae, which settlement agreement it only announced on 3 June 2019 when it said it would apply to the Competition Tribunal (the “Tribunal”) to approve the settlement as a consent order. The application was heard and granted by the Tribunal on 6 November 2019. Sonae agreed to pay a penalty of R46 944 495 in six instalments over a period of three years.

Shortly prior to this, on 3 October 2019, the Commission informed PG Bison that its immunity application had been declined. Immediately following the approval of the Sonae settlement by the Tribunal on 6 November 2019, PG Bison launched a review application in the High Court (on 7 November 2019), to review and set aside the Commission’s refusal to grant it immunity (the “Review Application”). This was the first occasion on which PG Bison made the existence of the immunity application known to third parties. Thereafter, on 13 November 2019, the Commission referred a complaint against PG Bison to the Tribunal, alleging collusive conduct for the period 2009 to 2016 (the “Complaint Referral”) and requesting a penalty of 10% of PG Bison’s annual turnover.

On 11 December 2019, PG Bison filed a stay application with the Tribunal to suspend the hearing of the Complaint Referral, pending the outcome of PG Bison’s Review Application (the “Stay Application”). The Commission has since indicated that it would not oppose the Stay Application. The Review Application is in the early stages.

KAP has a comprehensive and well entrenched code of ethics which includes competition law matters. KAP has also conducted competition law training for several years at a corporate level and within its divisions in order to prevent any anticompetitive behaviour taking place.