Commission cracks glass cartel

Six firms active in the manufacturing and distribution of glass products for the building and construction industry have been found to have been involved in a cartel by a Competition Commission investigation. In its latest ruling on anti-competitive practices in the building and construction industry, the commission alleged that National Glass, Northern Hardware and Glass, Furman Glass, McCoy’s Glass, AF-FSL Glass and Glass South Africa, which is part of the PG Group, were involved in price-fixing, market allocation and the fixing of trading conditions for float, laminated and toughened glass in the Gauteng, Free State and Western Cape regions through various arrangements and agreements.

The commission last month confirmed it hoped to reach settlement agreements by June with 15 construction firms in terms of its fast-track settlement process launched for the construction industry in 2011, after an initial probe uncovered 65 bid-rigging cases in the sector involving more than 70 projects valued at R29 billion. Prior to this, the commission uncovered a number of cartels in the building materials industry, involving among others pre-cast concrete, plastic pipe, wire mesh and cement. Trudi Makhaya, a deputy commissioner at the commission, said yesterday that it had initiated the investigation into cartel activity in the glass industry in February 2010 based on information it received in a leniency application by AF-FSL Glass in June 2009.

Makhaya said AF-FSL Glass was granted conditional leniency from prosecution. She said the investigation found that between 1995 and 2007 cartel members had telephone conversations and held various meetings where they fixed minimum selling prices, the percentage by which minimum prices would increase and the date for the implementation of the fixed prices. “The cartel members further agreed not to undercut one another by providing competitive prices to customers that ‘belonged’ to each other, and in 2005 they agreed to introduce a distribution or transport levy of 3 percent of the price charged to customers,” she said.

The commission has asked the Competition Tribunal to impose an administrative penalty of 10 percent of annual turnover on each of the firms. None of the implicated firms has entered into any settlement agreement yet with the commission. However, Makhaya said the commission had invited all the parties involved to settle and gave the opportunity to enter into settlement negotiations, and this offer would remain open until the tribunal issued an order. Stewart Jennings, the chief executive of the PG Group, said it “cherished competitive behaviour and was insistent that in all ways it complied with competition legislation”. He admitted that there was devious behaviour in the group a long time ago that it did not condone, but it was co-operating with the commission.

National Glass chief executive Anthony Adler said he was not in a position to comment. Brian Watson, one of the two major shareholders in Northern Hardware and Glass, said the firm was still obtaining advice on the decision and had no comment at this stage. Attempts to obtain comment from Furman Glass and McCoy’s Glass were unsuccessful.