Cape Gate fined R40 million for cartel conduct

The Competition Tribunal has confirmed a R40 million settlement agreement with wire and steel manufacturer Cape Gate, following the company’s admission of price fixing, dividing markets and collusive tendering in respect of lightly galvanised wire, nails, wire and various wire products.

The Competition Commission has welcomed the confirmation by the Tribunal as an order for the fine of R40 million.

Cape Gate agreed to the fine for cartel conduct after the company admitted that it contravened the Competition Act through its involvement in price fixing, dividing markets and collusive tendering in relation to wire and wire related products.

In calculating an appropriate settlement amount, the Commission submitted to the Tribunal that it had taken into account significant mitigating factors, as well as the current challenges in the wire industry.

Cape Gate has undertaken to continue cooperating with the Commission in its prosecution of the remaining companies accused of collusive conduct.

Case details
In 2009 the Commission referred to the Competition Tribunal a cartel case for prosecution against Cape Gate, Allens Meshco, Hendok, Wireforce Steelbar, Agriwire, Agriwire North, Agriwire Upington, Cape Wire, Forest Wire, Independent Galvanising and Associated Wire Industries and Consolidated Wire Industries.

The Commission found that the companies allocated customers from 2006 to 2008 by agreeing not to target each other’s customers.

The investigation also revealed that the companies tendered collusively, in certain instances, from 2001 to 2008 by co-ordinating their respective bids to supply cable armouring. The bids involving Cape Gate related to Harmony Gold and Malasela Technologies tenders.

The case, which dates back to 2009, has been prolonged by numerous legal challenges, which have taken the parties through various courts, including the Supreme Court of Appeal. Cape Gate admitted its involvement in the alleged collusion almost nine years ago and has, thereafter, assisted the Commission in its prosecution of the matter by providing further evidence and testimony as well as supporting the Commission in certain other legal processes related to matter.

While Consolidated Wire Industries Limited applied for leniency in terms of the Commission’s Corporate Leniency Policy, the case against the other accused companies continues to be litigated.