The 4 main tyre producers in South Africa allegedly held conferences and phone conversations from 1999 till at the very least 2007 in contravention of the Competitors Act to debate and agree value will increase and coordinate the timing of every improve, the Competitors Tribunal heard on Monday.
Advocate Daniel Berger SC, showing for the Competitors Fee (CompCom), advised the Competitors Tribunal that these conferences have been known as “espresso desk discussions”, have been casual and no minutes have been saved.
Berger was addressing the tribunal on the primary day of a scheduled 19-day listening to into alleged value fixing by Goodyear and Continental.
Goodyear and Continental have denied the allegations.
Bridgestone in September 2009 utilized for and was subsequently granted conditional immunity from prosecution when it comes to the fee’s company leniency coverage.
Apollo Tyres, then generally known as Dunlop, thereafter finalised a settlement settlement with the fee when it comes to which the corporate agreed to pay a R45 million effective. The tribunal confirmed this settlement settlement in December 2011.
Learn: Bridgestone admits to collusion (Sept 2010)
Berger stated that since Bridgestone is the leniency applicant and Dunlop has settled, this leaves solely Goodyear, Continental and the SA Tyre Producers Convention (STMC) because the remaining respondents who’re opposing the CompCom’s case.
He advised the listening to that greater than 20 years in the past in 1999, the 4 opponents held discussions and agreed to coordinate costs, initially for a value improve within the second half of 1999.
He stated in addition they mentioned which ones would lead the announcement of the worth will increase, the dimensions or vary of the rise and in addition the date from which the worth improve would turn out to be efficient.
Berger stated these identical 4 opponents met at OR Tambo Worldwide Airport on January 27 2000, with this assembly attended by the managing administrators and chief executives of the businesses.
“The assembly targeted on the truth that manufacturing prices in South Africa have been excessive, the tyre producers have been feeling the stress of uncooked materials prices and the drop within the alternate fee.
“It was proposed at that assembly that the businesses mustn’t struggle one another [but] as a substitute work collectively to get some sense of order and value stability available in the market… It was then that Dunlop, Goodyear, Continental and Bridgestone formalised their collusive relationship,” he stated.
Berger stated settlement was reached to cooperate with one another, notably in relation to cost will increase, and agreed on costs to be applied in February 2000.
He stated they additional agreed:
The implementation and operation particulars of their coordination going ahead for different value will increase could be dealt with by their gross sales and advertising representatives.
To align the message that they gave to vendor prospects because the rationale for every value improve in order that the rise could be accepted available in the market.
Berger stated it was vital for these opponents to agree on these issues as a result of a value improve by one in all them that was out of step with the costs of the others might lead to a lack of gross sales and a lack of market share.
“The conferences and phone conversations befell earlier than and infrequently after a value improve was introduced to the market.
“The 4 opponents took turns to rearrange the conferences, often by reserving a room on the Johannesburg Airport, which was a handy location for these representatives that needed to fly in for the assembly. The conferences have been casual, minutes weren’t taken,” he stated.
Berger stated the cartels are clandestine in nature and intensely troublesome to detect and the tyre cartel might have gone undetected had it not been for one proprietor of a fleet of vehicles, Parsons Transport, who got here ahead in October 2006 and introduced this cartel to the eye of the fee.
He famous Parsons complained that the foremost tyre producers labored with one another to set and manipulate the costs for his or her tyres in South Africa.
“The criticism was that the tyre producers concurrently adjusted their product costs as and after they preferred on the identical dates and for a similar so-called causes and that they used intelligent advertising constructions and pricing strategies to disguise their value fixing,” he stated.
Search and seizures
The fee on April 4 2008, after acquiring a warrant, carried out search and seizure operations on the premises of Bridgestone, Dunlop and the SATMC.
Berger stated the paperwork that have been seized uncovered proof that not solely corroborated the criticism of Parsons Transport, but in addition revealed different collusive conduct between the tyre producers.
He stated the fee after investigating the criticism was of the view that the collusive conduct was not solely a few value fixing contravention nevertheless it included division of markets, collusive tendering and the alternate of competitively delicate data.
The fee’s investigation additionally pointed to discussions by the SATMC and the SATMC’s involvement within the cartel conduct, he stated.
Berger added that the alleged collusive conduct not solely associated to the sale of substitute tyres but in addition to the sale of tyres to car producers and the federal government and tender value changes to be requested from the State Tender Board to make sure the tyre producers obtained the identical share will increase from the State Tender Board.
He stated that Bridgestone, in help of its leniency utility, gave the fee data to corroborate the truth that collusive conferences and discussions had certainly taken place.
Berger famous that Bridgestone submitted additional data to the fee in 2010 that not solely confirmed the Parsons criticism but in addition offered the fee with proof that the collusive pricing had began way back to 1999.
Bridgestone additionally included proof concerning agreements to scale back checklist costs to scale back the dimensions of the reductions that sellers have been providing to prospects and proof of interactions between the tyre producers concerning the provision of tyres to unique tools producers (OEMs) and proof concerning submissions to the State Tender Board.
The fee concluded that proof of prohibited conduct had been established and referred the matter to the tribunal on August 31 2010.
Berger stated that because the referral, the fee and Goodyear and Continental have been concerned in litigation on preliminary points till late October 2018.
“The matter is now lastly earlier than the tribunal for listening to, greater than 10 years after its initiation and greater than 20 years after that assembly in January 2000.”
“Though the prohibited conduct befell a few years in the past and clearly recollections fade, it’s lucky that the fee has been capable of get hold of notes and diary entries that corroborate what the fee’s witnesses are saying,” he stated.
Shaun Wustmann, the previous divisional head of gross sales and advertising at Bridgestone and now retired, took the tribunal by his notes of conferences he attended with representatives of the opposite three tyre corporations and at which he claimed the worth will increase and their coordination was mentioned and agreed.