Business In The News

Afrimat referred to Competition Trubunal over abusing market dominance

JOHANNESBURG, April 3 (ANA) – The Competition Commission on Monday referred Afrimat for prosecution to the Competition Tribunal for allegedly abusing its dominance in the clicker bricks industry by charging excessive prices.

Afrimat, the leading black empowered open pit mining company, is the supplier of clinker ash.

Clicker ash aggregate is a main ingredient in clinker bricks largely used in the construction of state-funded low cost RDP houses. It is waste ash, or coal ash, generated by coal-fired power stations.

In South Africa, Eskom disposes of the ash in ash dumps near its power stations.

Through its wholly-owned subsidiary Clinker Supplies, Afrimat has exclusive rights from Eskom to source waste ash from dumps at three disused coal-fired power stations in Gauteng and the Free State. Afrimat also has royalty and indefinite land rental agreements with Eskom until the ash dumps are exhausted.

The Competition Commission said Afrimat was therefore the only supplier of clinker ash within a 100km radius of each respective ash dump site.

“This means it is dominant in the relevant geographic markets for the production and supply of the clinker ash aggregate. Clinker brick manufacturers in these areas, who use the clinker ash aggregate, are dependent on Afrimat,” the Commission said.

The Competition Commissioner initiated an investigation in March 2015 against Afrimat and its two subsidiaries, Clinker and SA Block and Concrete.

The Commission said Afrimat acquired Clinker in 2002 and following the acquisition, it escalated the pricing of clinker ash aggregate significantly. The investigation found that the prices exceeded its economic value dramatically.

It also found that Afrimat abused its dominant position from 2012 until at least 2016, with suspicion that the conduct may be ongoing, by charging clinker bricks manufacturers excessive prices to the detriment of consumers.

In addition, the Commission found that the prices bore no relation to the economic value of the product.

The Commission is seeking an order from the Tribunal declaring that Afrimat has contravened the Competition Act and that it must pay the maximum administrative penalty amounting to 10 percent of its annual turnover in South Africa as well as its exports from the country.

  • – African News Agency (ANA)

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