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COMPETITION TRIBUNAL

REPUBLIC OF SOUTH AFRICA

Case No: 23/CR/Feb09

in the matter between:

The Competition Commission Applicant

and

Concrete Units (Pty) Ltd Respondent

Panel : N Manoim (Presiding Member), Y Carrim (Tribunal Member), and A Wessels (Tribunal Member)

Heard on 31 March 2010

Decided on : 31 March 2010

Order

The Tribunal hereby confirms the order as agreed to and proposed by the Competition Commission and the respondent, annexed hereto marked "A".

N Manoim

Concurring: Y Carrim and A Wessels

IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA

HELD AT PRETORIA

In the matter between:

Ref: 2008Mar3595

THE COMPETITION COMMISSION Applicant

And

CONCRETE UNITS (PROPRIETARY) LIMITED AND OTHERS Respondent

SETTLEMENT AGREEMENT BETWEEN THE COMPETITION COMMISSION AND CONCRETE UNITS (PROPRIETARY) LIMITED IN REGARD TO THE ALLEGED CONTRAVENTION OF SECTIONS 4 (1) (b) (I), 4 (1) (b) (ii),(1) (b) (iii) OF THE COMPETITION ACT NO. 89 OF 1998 (AS AMENDED)

The Commission and Concrete Units hereby enter into a Settlement Agreement in terms of section 49D of the Competition Apt, No. 89 of 1998, (as amended) (the "Act") and agree that application be made for an order confirming the Settlement Agreement, in terms of section 58(1 )(b) of the Act, on the terms set out more fully below.

Definitions

For the purposes of this Consent Order the foiiowing definitions shall apply:

1.1. "Act" means the Competition Act, Number 89 of 1998 (as amended).

1.2. "Commission" means the Competition Commission of South Africa, a statutory body, established in terms of section 19 of the Act, with its principal place of business at Building C, Mulayo Building, DTI Campus, 77 Meintjies Street, Sunnyside, Pretoria, Gauteng.

1.3. "Commissioner" means the Commissioner of the Competition Commission, appointed in terms of section £2 of the Act.

1.4. "Complaint" means the Complaint initiated by the Commissioner of the Commission against the Respondents under case number 2008MAR3595.

1.5. "Concrete Units" means Concrete Units (Proprietary) Limited, a private company duly registered in accordance with the company laws of the Republic of South Africa, wjth its principal place of business at Montreal Drive, Airport industria, Cape Town.

1.6. "Days” means calendar days.

1.7. "Parties" means, collectively, the Commission and Concrete Units.

1.8. "Period" means the period from the year 2000 to September 2007.

1.9. "Prohibited Practice" means a practice prohibited in terms of Chapter 2 of the Act.

1.10. "Respondents" means, collectively, Aveng Africa Limited f/a Infraset ("Infraset"), Cape Concrete (Proprietary) Limited ("Cape Concrete"), Cobro (Proprietary) Limited ("Cobro"), Concrite Waiis (Proprietary) Libiited, Concrete Units, Craig Concrete (Proprietary) Limited ("Craig Concrete"), DND Concrete (Proprietary) Limited, Empowa-Grinaker Lta (Proprietary) Limited, Grallio (Proprietary) Limited, Southern Pipeline Contractors (Proprietary) Limited ("SPC") and Rocla (Proprietary) Limited ("Rocla").

1.11. "Settlement Agreement" means this agreement duly signed and concluded between the Commission and Concrete Units.

1.12. "Tribunal" means the Competition Tribunal of South Africa, a statutory body, established in terms of section 26 of the Act, with its principal place of business at Building C, Mulayo Building, DTI Campus, 77 Meintjies Street, Sunnyside, Pretoria, Gauteng.

The Complaint and Complaint investigation

2.1. During December 2007, the Commission received information regarding
allegations that the Respondents operated a cartel in the pre-cast concrete
industry in. South Africa. The information was received by virtue of a corporate
leniency application submitted to the Commission by one of the Respondents,
Rocla. In its leniency application, Rocla advised the Commission that the
Respondents had engaged in the following conduct -

2.1.1. fixing the selling price of precast concrete pipes, culverts and manholes;

2.2.2. dividing the markets for the production and distribution of precast concrete pipes, culverts and manholes; and

2.1.3. collusive tendering in respect of the supply of precast concrete products and precast concrete sleepers to certain suppliers.

2.2. The Commissioner initiated an investigation into the activities of the Respondents
on 19 March 2008. These investigations established that the Respondents
operated a cartel within the pre-cast concrete industry in South Africa and, in certain instances, in neighbouring African countries such as Namibia, Botswana, Mozambique, Lesotho and Swaziland.

Commission's Findings

Upon completion of its investigation into the Complaint, the Commission found that Concrete Units had engaged in the following prohibited practices during the Period, namely -

3.1. Price fixing and fixing of trading conditions

3.1.1. As regards the production and supply of precast concrete pipes in the Gauteng region of South Africa, Concrete Units and the relevant Respondents (namely, Craig Concrete, Infraset, Rocla and SPC) engaged in price fixing and fixing of trading conditions for the manufacture and sale of pre-cast concrete pipes, in contravention of section 4(1)(b)(i) of the Act.

3.1.2. As regards the production and supply of precast concrete culverts in the Gauteng region of South Africa, Concrete Units and the relevant Respondents (narne'iy, infraset. and Rocia) engaged in price fixing and fixing of trading conditions for the manufacture and sale of pre-cast concrete culverts, in contravention of section 4(1 )(b)(i) of the Act.

3.1.3. As regards the production and supply of precast concrete culverts in
the Western Cape' region of South Africa, Concrete Units and the
relevant Respondents (namely, infraset and Roo(a) engaged in price
fixing and fixing of trading conditions for the manufacture and sale of pre-cast concrete culverts, in contravention of section 4(1)(b)(i) of the Act.

3.1.4. More particularly, the prjce fixing and fixing of trading terms and
conditions involved Concrete Units and the relevant Respondents in
each case, fixing -

3.1.4.1. the prices that each would quote to customers/contractors allocated to each pther for the pre-cast concrete pipes and culverts;

3.1.4.2. the price increases and discounts to be offered to customers for the pre~cast concrete pipes and culverts; and

3.1.5. Furthermore, discussions on price increases, prices to be quoted to customers and discpunts occurred between Concrete Units and the relevant Respondents during meetings held during the Period. These discussions were confirmed in written documentation such as price lists and modus operandi documentation generated and exchanged between Concrete Units and the relevant Respondents during the Period.

3.1.6. Through these agreements, Concrete Units and the Respondents prevented and/or limited price competition amongst themselves in relation to the pricing of precast concrete pipes and culverts.

32. Market Division

3.2.1. As regards thp production and supply of precast concrete pipes in the Gauteng region of South Africa, Concrete Units and the relevant Respondents (in particular, Craig Concrete, infraset, Rocla and SRC) agreed to divide/share the market for precast concrete pipes in contravention of section 4{1)(b)(ii) of the Act.

3.2.2. As regards the production' and supply of precast concrete culverts in the Gauteng region of South Africa, Concrete Units and the relevant Respondents (in particular, Infraset and Rocla) agreed to divide/share the market for precast concrete pipes in contravention of section 4(1)(b)(ii) of the Act.

3.2.3. More particularly, the dividing/sharing of the market for precast Concrete Pipes and culverts involved Concrete Units and the relevant Respondents in each case, -

3.2.3.1. allocating customers/contracts amongst themselves in accordance with their agreed respective percentage market shares of the Gauteng market for precast concrete pipes and culverts; and

3.2.3.2. allocating specific territories within Gauteng to which each firm would supply precast concrete pipes and culverts.

3.2.3.3. Furthermore, in the market for precast concrete pipes in Gauteng it was agreed that the following market shares would be maintained; Craig Concrete (15.75%), Concrete Units (10%), infraset (35.75%), Rocla (26.75%) and SPC (11.75%).

3.2.3.4. These figures were amended subsequent to SPC's acquisition of Craig Concrete in or around 2001, save for Concrete Units, whose market share remained at 10%.

3.2.4. As regards the production and supply of precast concrete culverts in the Western Cape region of South Africa, Concrete Units and the Respondents (in particular, Infraset and Rocla) agreed to divide/share the market for precast concrete culverts in contravention of section 4(1)(b)(ii) of the Act by-

3.2.4.1. allocating customers/contracts amongst themselves in accordance with their respective percentage market shares of the Western Cape market for precast concrete culverts; and

3.2.4.2. allocating specific territories within the Western Cape to which each firm would supply precast concrete culverts.

3.2.5. Furthermore, Concrete Units and those Respondents (namely, Cape
Concrete, infraset and Rocla) who were its competitors for the
manufacture and sale of precast concrete culverts in the Western Cape region, agreed that Cape Concrete would not compete with Concrete Units, Infraset and Rocla in relation to precast concrete culverts in that region, in contravention of section 4(1) (b)(ii) of the Act,

3.2.6. Furthermore, Concrete Units and the relevant Respondents (namely, Infraset and Rocla) agreed that Concrete Units' would not manufacture any precast concrete pipes in the Western Cape region unless the market reached a predetermined threshold volume, in contravention of section 4(1)(b)(H) of the Act.

3.2.7. The precast concrete pipes market in the Western Cape did not reach the predetermined threshold during the Period and consequently, Concrete Upits never entered this market.

3.3. Collusive Tendering

Concrete Units engaged in collusive tendering in relation to pre-cast concrete pipes and culverts within the Gauteng region and culverts, within the Western Cape region, together with the relevant Respondents in each case, in contravention of section 4{1)(b)(iii) of the Act

4.

Admission

The Commission and Concrete Units agree that, for the duration of the Period, the conduct engaged in by Concrete Units (as espoused in paragraph 3 above) constitutes a contravention, of sections 4(1)(b)(i), 4(1)(b)(ii) and 4(1)(b)(iii) of the Act.

5

Agreement Concerning Future Conduct

5.1. The Parties record that Concrete Units' participation in the conduct that formed the subject matter of the Complaint ceased in or about September 2007.

5.2. Concrete Units undertakes to refrain from engaging in price fixing, fixing of trading conditions, market division and collusive tendering in contravention of sections 4(1)(b)(i), 4(1)(b)(ii) and 4(1)(b)(iii) of the Act, in relation to the manufacture and sale of fire-cast concrete pipes and culverts in South Africa.

5.3. Within 6 months from the date of this Settlement Agreement, Concrete Units agrees to develop, implement, monitor and enforce a competition law compliance programme in order to ensure that its employees, management, directors and agents do not engage in future contraventions of the Competition Act.

5.4. Concrete Units agrees to make all reasonable efforts to co-operate with the Commission in the prosecution of any other party in refation to the Complaint. This includes, but is not limited tp providing relevant witness statements, giving oral testimony before the tribunal.

5.5. Concrete Units agrees to provide copies of this Settlement Agreement to each of its present directors and during the five-year period following the confirmation of this Settlement Agreement by the Tribunal, provide a copy to any future director on his or her future appointment and in each case draw the attention of such director to the contents of the Settlement agreement.

6

Administrative Penalty

1. In terms of section 58(1)(a)(Hi) read with sections 59(1 )(a), 59(2) and 59(3) of the Act, Concrete Units is liable for an administrative penalty.

2. The Parties agree that Concrete Units will pay an administrative penalty in the amount of R5 763 743 (five million spven hundred and sixty three thousand, seven hundred and forty three rand), being 7 per cent of Concrete Units' turnover for the financial year ending 2008.

3. Concrete Units will pay the administrative penalty Within 6 months of the date of the confirmation of this Settlement Agreement by the Tribunal.

4. The Commission will pay the administrative penalty received from Concrete Units into the National Revenue Fund as contemplated by section 59(4) of the Act.

7.

Application to the Tribunal

The Parties to this Settlement Agreement hereby agree that application be made to the Tribunal to have this Settlement Agreement confirmed as Consent Order as provided for in section 49D read with section 58(1 )(b) of the Act.

8.

Full and Final Settlement

This Settlement Agreement is entered into in full and final settlement and upon confirmation as a Consent Order by the Tribunal, concludes all proceedings between the Commission and Concrete Unjts relating to any alleged contravention by Concrete Units of sections 4(1)(b) (i), 4(1)(b)(ii) and 4 (1)(b)(iii) of the Act that are the subject of the Complaint and the Commission's Investigations under case number 2008MAR3595.

Dated and signed in Cape Town on this the 1^st day of March 2010

Managing Director:

Concrete Units (Proprietary) Limited

Date and signed in Pretoria on this the 1^st day of Feb 2010

Shan Ramburuth

The Commissioner

Competition Commission

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