Sasol fined 533 million rand for overpricing - CNBC Africa

Sasol fined 533 million rand for overpricing

Southern Africa

by Trust Matsilele 0

Sasol's subsidiary company has been fined 533 million rand for overpricing. PHOTO: First African

According to the investigation by the Competition Tribunal with regards to the company’s conduct between January 2004 and December 2007, Sasol Chemical Industries (SCI) was overcharging for purified propylene and polypropylene.

READ MORE: Research and development at the heart of innovation: Sasol)

The tribunal imposed a penalty of 205.2 million rand in the case of purified propylene and 328.8 million rand in respect of polypropylene.

It also imposed remedies for determining SCI’s future pricing of both purified propylene and polypropylene that would see SCI’s prices charged to local customers drop.

Purified propylene, produced from feedstock propylene, is an input in the production of polypropylene. Polypropylene is a key input for plastic converters who manufacture industrial and household plastic products.

The tribunal’s findings come after a lengthy hearing into allegations of excessive pricing brought by the Competition Commission against SCI.

The hearing that lasted several months started on 13 May 2013, with final submissions in the case being made on 9 May 2014.

The tribunal’s judgment focused on the historical context within which Sasol was established, the substantial government backing and the protection which Sasol received over the years.

SCI argued in the hearing that the tribunal should ignore this cost advantage in arriving at its decision while the commission argued that the cost advantage should be taken into account.

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The tribunal decided to take the cost advantage into account, finding that SCI’s market positions were not the result of risk taking and innovation. The company had not engaged in any significant innovation in the production of either purified propylene or polypropylene.

When reached for comment, [DATA SOL:Sasol Limited] noted that after studying the judgment they would issue a response to the ruling by the Competition Tribunal. 

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