The Tribunal has dismissed a gas against 5 LPG firms.
The Competition Tribunal has dismissed a case of alleged price fixing against five liquefied petroleum gas (LPG) companies accused of flouting the law when fixing the deposit fee charged to first time purchasers of cylinders.
The matter relates to price adjustments made in 2015, and the case was brought to the Tribunal by the Competition Commission.
The Commission alleged that during South African Petroleum Industry Association (Sapia) meetings, Totalgaz Southern Africa, Oryx Oil South Africa, Easigas, Kayagas and African Oxygen concluded an agreement to increase the deposit fees on LPG cylinders for first-time buyers, in contravention of the Competition Act.
The alleged agreement resulted in the firms simultaneously increasing the deposit fee to R300 for cylinders ranging in sizes of 9kg to 48kg.
The LPG firms argued that their decision to adopt the same increase in the cylinder deposit fee was due to the “vertical relationship” between them as participants in the Cylinder Exchange Program (CEP). This refers to the nature of the relationship in the supply chain, and can be compared to horizontal relationships, or those between companies in the same level of a supply chain.
They further argued that, even in the “worst-case scenario” of the Tribunal finding, they were competitors in the supply of cylinders, the CEP delivered benefits to consumers and was not designed to restrict competition in the sale of LPG. Rather, it facilitated the increased sale of LPG by a rapid return of cylinders to each wholesaler, which necessitated a uniform deposit fee for its smooth functioning.
Following a hearing last year, and consideration of factual and expert evidence, the Tribunal found that the conduct which the LPG firms were accused of cannot be associated with a “hardcore cartel”.
The Tribunal found that even if the LPG firms were assumed to be competitors for the supply of cylinders, their conduct was not prohibited in terms of section of the Competition Act the Commission had used in the case. This section concerns restrictive practices.