Packaging and recycling group Mpact has escaped punishment for engaging in price-fixing activities after co-operating with the Competition Commission in its probe into anticompetitive practices in the industry.
The competition watchdog on Wednesday said its investigation into anticompetitive behaviour by Mpact and New Era found that the companies colluded in fixing prices.
However, the commission showed leniency to Mpact after it came clean on its involvement, with New Era left to take the blame, being slapped with a fine of R21.2m.
It found that the two manufacturers had 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 remains as low as possible, which amounts to price fixing.
“New Era and Mpact are the largest producers of packaging paper products in SA,” the commission said.
“They produce packaging sheets, including kraft paper, containerboard and corrugated sheets, and convert these products into paper bags, cartons and boxes. New Era and Mpact also sell sheet-fed packaging papers to independent converters who convert them into paper bags, cartons and boxes in competition with New Era and Mpact,” it said, adding that Mpact had successfully sought immunity from prosecution.
“These products are then sold to customers such as Simba, Enterprise Foods, Colgate and cement factories. The commission has reasonable grounds to suspect that New Era and Mpact have engaged in collusive practices in contravention of the Competition Act, which prohibits competitors from reaching agreements to fix prices, allocate customers or rig tenders.
“This search-and-seizure operation is conducted with due regard to the rights of New Era and Mpact, and all persons affected. During the operation the commission will seize all documents and electronic data relevant to the investigation.”
In a statement on Thursday, JSE-listed Mpact said it believed that it had acted ethically, diligently and transparently in the best interests of all stakeholders throughout the commission’s investigation.
Corporate leniency
The Johannesburg-based group said it had co-operated with the commission and dealt with the issues identified transparently through applying for corporate leniency.
“Pursuant to its leniency policy, the commission is not seeking the imposition of a penalty against Mpact in the complaints, which have been settled by New Era without any admission of liability,” Mpact said. “Mpact is pleased to note that, as the commission has settled with New Era, this historic matter has now been finalised.”
The group said it has in place numerous measures to ensure good corporate governance across all its operations.
Mpact’s share priced ended the day up 0.32% at R28.60. It has a market cap of R4.274bn.
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