Nine installers of automatic fire sprinklers, implicated in a cartel case currently being heard before the Competition Tribunal (“the Tribunal”), have concluded separate settlement agreements after being afforded an opportunity by the Tribunal to settle the matter with the Competition Commission (“the Commission”) which is prosecuting the case.
 
The settlement agreements have been confirmed as orders by the Tribunal. This effectively means that these firms will no longer be prosecuted as the agreements constitute full and final settlement of all proceedings between the firms and the Commission.
 
In September 2021, Jasco Security and Fire Solutions (Pty) Ltd (“Jasco”) also settled with the Commission. Although Jasco agreed to pay a R300 000 administrative penalty, it did not admit to having contravened the Competition Act.
 
This brings to 10 the total number of firms that have settled in this matter. In addition, the Commission earlier withdrew its case against one of the accused firms. This leaves a total of seven firms that are being prosecuted in the cartel case. These firms opted not to settle with the Commission and are contesting the matter before the Tribunal.
 
Penalties
 
In terms of the nine settlement agreements, the firms have not admitted that they contravened section 4(1)(b)(ii) of the Competition Act i.e. dividing markets, of which they were accused by the Commission. However, they have agreed to pay separate administrative penalties, collectively totalling more than R2 million as depicted attached.

 

• The Commission agreed to enter into the settlement agreements without admissions of liability based on a combination of factors including the following:
• The Commission is incentivising these firms to discontinue from adhering to any Automatic Sprinkler Inspection Bureau (“ASIB”) rules that divide the markets, as part of its strategy to end the alleged anti-competitive conduct occasioned by these rules in the market for installation and inspection of automatic fire sprinklers;
• Some of the firms are small players in the affected market; and
• The majority of these firms have not been found to have contravened the Act before.

Future conduct 

• Among others, the firms undertake not to agree or adhere to any ASIB rule which would preclude them from operating in any geographic region;
• Should the firms wish to enter the market for the provision of inspection services (which is allegedly reserved for ASIB) they undertake not to restrict their right to do so by agreeing with any actual or potential competitors in that market, or with ASIB, to restrict such activities;
• The firms undertake not to restrict their sourcing of inspection services from only ASIB, provided it is commercially viable to do so;
• The firms will develop, implement and monitor competition law compliance programmes; and
• The firms commit to competitive practices and refraining from engaging in any anti-competitive conduct in contravention of the Act.

Background
 
In July 2017, the Commission launched an investigation into ASIB and all sprinkler installers registered with it and found, among others, that:

on becoming a listed installer of ASIB, each of the listed installers agreed to adhere to ASIB rules which dictated that inspection services would be performed by ASIB only while the listed installers would provide only installation services; and

the ASIB rules enabled listed installers to divide the market by allocating territories in that a listed installer registered in a particular area would be limited to render its service in its registered area.

The Commission concluded that this conduct between ASIB and listed installers amounts to market division by allocation of specific types of services and territories in contravention of section 4(1)(b)(ii) of the Act and subsequently referred the case to the Tribunal for prosecution. 

 

Administrative penalties, collectively totalling more than R2 million as depicted Attached

 

Issued by Gillian de Gouveia, Communications Officer on behalf of the Competition Tribunal of South Africa