“INDUSTRIAL policy by stealth” was one description of the Competition Tribunal’s decision this week to effectively impose a new pricing policy on Sasol Chemical Industries (SCI).
This is not the first time the tribunal has issued a pricing remedy, but its dramatic ruling has implications for other dominant players in South Africa’s economy who have used their positions to secure high profits at the expense of broader industrial growth.
As one industrial analyst put it: “If the Sasol ruling is upheld it can’t be too long before Mittal is hauled back before the competition authorities on charges of excessive pricing.”
The decision, if not overturned on appeal, will lead to Sasol’s South African customers paying a lot less for their polypropylene and also less than SCI’s international customers.
This effectively means the competition authorities are extending their oversight role beyond competition issues and into industrial policy. That clearly pleased those who have been buying Sasol’s product — and paying over the bar for it.
Coenraad Bezuidenhout of the Manufacturing Circle said: “We obviously welcome the tribunal’s ruling as Sasol’s overpricing has been undermining the downstream activities of the manufacturers we represent.”
Mr Bezuidenhout urged the regulators to look at other areas where Sasol was abusing its dominant position to secure high profits at the expense of downstream manufacturers.
However, using competition authorities as a tool in industrial policy is likely to raise concern in some circles — although this is not without international precedent and, given the persistent market failure involved, it may be the most effective way of ensuring an efficient and de-politicised outcome.
For years the government tried in vain to persuade high-profile JSE-listed groups such as ArcelorMittal, Telkom and Sasol to adopt pricing policies that would support industrial development in South Africa…
South Africa Today – South Africa News
