MPACT Group said yesterday that the Competition Commission does not aim to impose a penalty against it following the settling of the price fixing complaints by competitor packaging group, New Era Packaging.
The Commission, which acts as the investigating and recommending body for the Competition Tribunal, said this week New Era had reached a settlement and agreed to pay R21.3 million amid claims that it and Mpact co-operated to establish prices of key products.
The Commission would forward the consent agreement to the Tribunal, which aims to settle two complaints against New Era without admission of liability. Mpact, on the other hand, had successfully sought immunity from prosecution in both complaints, in the process agreeing to co-operate with the Commission.
The Commission initiated the first complaint for an investigation on May 16, 2016, against Mpact and New Era for alleged price fixing, market division and collusive tendering in the market for the manufacture and supply of packaging paper.
The Commission initiated the second complaint for an investigation on April 19, 2017, against Mpact and New Era for price fixing, market division and collusive tendering in the market for the collection and supply of recyclable paper material.
In the first complaint, the Commission found that from around 1998 Mpact and New Era agreed not to compete for each other’s traditional customers in the market for the manufacture and supply of packaging paper.
The investigation found that Mpact and New Era rigged bids that they submitted to their “traditional customers”.
On the second complaint, the Commission found the companies agreed to operate in a “sensible” manner when purchasing recyclable paper material to avoid price wars and to ensure that the base price of the loose material remained as low as possible.
Mpact said yesterday the Commission’s investigation had concerned interactions between a former employee of Mpact and a representative of New Era in its capacity as a competitor prior to 2016.
The investigation in relation to recycling emanated from the initial investigation by the Commission, and related to historic conduct that arose from a shortage of supply of recyclable material in the market required for the production of paper.
“In order to ensure Mpact was able to continue to supply paper to its customers, including New Era, for a relatively short period New Era facilitated the supply of baled recyclable material to Mpact from one of its significant suppliers of such material.
“The conduct in question related to certain communications between the parties in the context of a request from the supplier to change the price the supplier had agreed.”
Mpact said in a statement that as soon as the conduct was brought to the attention of its board in 2016, it had immediately engaged with the Commission, and had been co-operating with the Commission since then in relation to its investigations.