10% Turnover Penalty Requested for South Africa Tyre Cartel Participants

South Africa’s Competition Commission reports it has referred a complaint of collusive tendering, price fixing, information exchange and market allocation against the South African Tyre Manufacturers Conference (Pty) Ltd (SATMC) and the four tyre manufacturers and suppliers it represents to the Competition Tribunal for adjudication.

The Commission’s investigation against the SATMC and member companies Apollo Tyres South Africa, Goodyear South Africa, Continental Tyre South Africa and Bridgestone South Africa was prompted by a complaint alleging the tyre manufacturers simultaneously adjusted their prices around the same time and within the same parameters. As a result of the complaint, on 04 April 2008 the Commission conducted a search and seizure operation at the premises of Bridgestone, Apollo and the SATMC.

Pursuant to the Commission’s investigation and interrogations, one of the cartel members, Bridgestone applied for and was granted conditional immunity from prosecution in terms of the Commission’s Corporate Leniency Policy (CLP). In its application for leniency, Bridgestone admitted it held telephonic discussions and met with its competitors during the period 1999 to 2007 to agree in principle that they should cooperate to ensure stability in the market. The meetings, which were attended by the tyre manufacturers’ sales and marketing representatives, co-ordinated the timing and the average percentage price increase of tyres, agreed on the discount structure to be given to tyre dealers and messages to be given to the market explaining the increases. 

The cartel focused upon the manufacture and supply of passenger tyres, light truck/commercial tyres, trucks and bus tyres, off the road tyres, agricultural tyres and earthmover tyres in South Africa. The Commission’s investigation found the SATMC was used as a platform for what has been termed “coffee table discussions” to determine price increases and general coordination in the market amongst the tyre manufacturers. The investigation also found that importers of tyre products namely Yokohama Southern Africa and Michelin Tyre Company South Africa were not involved in the cartel conduct.

The Commission has requested the Tribunal to impose an administrative penalty amounting to ten per cent the SATMC, Apollo, Goodyear and Continental’s respective turnovers. Bridgestone has reportedly said it will continue to co-operate with the Competition Commission. “Bridgestone SA has been granted conditional leniency for its past involvement in contraventions of the Competition Act, which conduct is now the subject of a complaint against other tyre manufacturers,” the company said in a statement. It will now continue to assist the commission throughout the complaint process.