PRESS STATEMENT
6 April 2008
Reclamation Group settles with R145m fine for collusion
The Competition Commission has reached a settlement agreement with the New Reclamation Group (Pty) Ltd (Reclam) over the latter’s involvement in collusion and price fixing in the ferrous and non-ferrous scrap metal markets. In terms of this consent agreement, Reclam has agreed to pay an administrative penalty of R145 972 065.00, representing 6% of Reclam’s annual turnover in the affected markets. The settlement has been referred to the Competition Tribunal, which, following a public hearing, will issue an order confirming the agreement.
Reclam is involved in the recycling of scrap metals, glass, rubber, plastic and other materials and is a major collector and processor of non-ferrous and ferrous metal in South Africa.
Reclam contravened the Competition Act in:
Agreeing to fix prices with its competitors for the supply of ferrous metal;
- Agreeing to fix prices with its competitors for the purchase of non-ferrous scrap metal; and
- Entering into exclusive agreements and other arrangements with its competitors to divide markets by allocating territories and customers for the supply of ferrous and non-ferrous metals.
This is the largest settlement of an administrative penalty in both real and percentage terms. The Competition Act allows for penalties of up to 10% of the business’s annual turnover. The Commission has agreed that Reclam may pay the penalty in 3 installments over 24 months.
Background
On 21 October 2005, Reclam and SA Metal and Machinery Co. (SAM) filed a large merger application with the Commission in respect of the proposed acquisition by Reclam of SAM and its associated company, Waste Control (Pty) Ltd. On 9 June 2006, the Commission recommended the prohibition of the merger. On 7 August 2006, Reclam filed a notice of abandonment of the merger.
On 11 August 2006, the Commission initiated a complaint against Reclam, SA Metal and Machinery Co., National Scrap Metal (Cape Town) (Pty) Ltd and Cape Town and Steel Work (Pty) Ltd. The Commission alleged that certain arrangements submitted to the Commission during the course of the merger investigation constituted market allocation and price fixing in contravention of the Act.
On 20 July 2007, the Commission conducted a search on Reclam’s premises, in the biggest operation of its kind conducted by the Commission since its inception. The raids took place simultaneously in the Durban, Port Elizabeth and Johannesburg offices of Reclam.
ENDS
Prepared by: FD Beachhead
Dani Cohen 021 487 9021 / 082 897 0443 and Jennifer Cohen 011 214 2401 / 082 468 64 69
On behalf of: The Competition Commission
Further info: Shan Ramburuth, Commissioner, 083 357 1685