Kwacha Industries and Hardware Limited fined for Unfair Trading Practices
2021-04-28A 0.5 percent fine has been imposed on Kwacha Industries and Hardware Limited by the Competition and Consumer Protection Commission (CCPC) Board of Commissioners for engaging in unfair trading practices.
This follows a complaint that was lodged before the Competition and Consumer Protection Commission in which the complainant Mr. Liyungu Muyunda alleged that Kwacha Industries and Hardware Limited failed to deliver roofing materials as per agreed terms and conditions.
Facts of the matter were that the Complainant made a payment of K4, 200.00 between 10th and 24th December 2019 to Kwacha Industries and Hardware Limited for roofing materials worth K20, 820.00 on hire purchase. He was further assured at the time of purchase that the materials would be delivered upon payment of the K4, 200.00.
However, despite paying the agreed down payment of K K4, 200.00. the materials were not delivered and his demands for the K4, 200.00. refund was ignored. Investigation findings by the Commission revealed that Kwacha Industries and Hardware Limited did fail to deliver roofing materials to Mr. Liyungu Muyunda contrary to the agreed period.
As such, the Board of Commissioners has directed Kwacha Industries and Hardware Limited to refund Mr. Liyungu Muyunda a sum of K4, 200 within ten (10) days of receipt of the Board Decision in accordance with Section 5(d) and for breach of Section 49(5) of the Competition and Consumer Protection Act No. 24 of 2010 respectively.
Further, the Board has directed Kwacha Industries and Hardware Limited to submit their latest annual books of accounts to the Commission for calculation of the actual fine within thirty (30) days of receipt of the Board Decision.The decision to fine Kwacha Industries and Hardware Limited was made during the 48th Board of Commissioners for the adjudication of cases held in Lusaka.
Namukolo M. Kasumpa
CCPC Fines Cement Companies for Anti-Competitive Trade Practices and Orders Adjustment of Prices
The Board of Commissioners of the Competition and Consumer Protection Commission (CCPC) has fined Lafarge Zambia Plc and Mpande Limestone Limited 10% of their annual turnovers for the year 2019 and another 10% of their 2020 annual turnovers for price fixing and division of markets, while Dangote Cement Zambia Limited was granted full leniency for having cooperated with the Commission during investigations.
Further, the Board has ordered Lafarge Zambia Plc, Dangote Cement Zambia Limited and Mpande Limestone Limited to revert to the pre-cartel prices ranging between USD 4.50 – USD 5 for a period of one year from the date of receipt of the Board Decision pursuant to Section 59 (3) (b) of the Act. Additionally, that Lafarge Zambia Plc, Dangote Cement Zambia Limited, Mpande Limestone Limited submit monthly average ex-works prices and any price adjustments be indexed to the exchange rate and be submitted to the Commission for review pursuant to Section 58 (1) of the Act;
The Board has also ordered the three Cement Companies to develop and implement compliance programmes in their respective firms within 90 days of receiving the Board Directive.
Furthermore, the Board has directed Lafarge Zambia PLC, Dangote Cement Zambia Limited and Mpande Limestone to make undertakings within 90 days of receiving the directive that their respective employees should not engage in any anti-competitive behaviour and that the enterprises should not facilitate and/or participate in any anti-competitive conduct including the exchange of information.
The Board of Commissioners also dropped charges against Zambezi Portland Cement Limited after it was established that they were not part of the cement cartel.
The decision to fine Lafarge Zambia Plc and Mpande Limestone Limited was made during the 49th Board of Commissioners Meeting for the Adjudication of Cases held in Lusaka on 30th March 2021.
This was after an exhaustive investigation by the Commission initiated in January 2020, following the Commission’s observations of a sustained increment of cement prices from an average of K55 to K100 per 50Kg bag between July 2019 and January 2020. The continuous price increment of cement by the parties led the Commission to suspect that there was possible collusion and an agreement to fix the prices of cement.
The investigation which lasted for over one (1) year revealed that the parties shared price adjustment proposals seeking approval for price changes before the implementation date and in some cases before they were approved by their respective management. The exchange of commercially sensitive information on future prices and rebates demonstrated that there was a ‘meeting of minds’ among the Respondents to pursue an agreed objective.
The investigation established that company representatives from Mpande Limestone Limited, Dangote Cement Zambia Limited and Lafarge Zambia Plc held discussions and meetings which resulted in the development of a pricing philosophy to stop cement price reductions. The investigations also established that the Cement Companies had agreed on a flat rebate of ZMW3 sometime in December 2019.
The Board of Commissioners determined that the sharing or exchange of commercially sensitive information relating to future prices and rebates by Mpande Limestone Limited, Dangote Cement Zambia Limited and Lafarge Zambia Plc amounted to an agreement. The Board of Commissioners further determined that this agreement was anti-competitive as it was used to fix the price of cement and share markets contrary to Section 9(1) (a) and (b) of the Act respectively.
The Board notes that infrastructure development is the backbone of social-economic development and one of the Government’s key priority areas in the Seventh National Development Plan. The construction industry is very important for Zambia’s economic growth, infrastructural development and employment generation and the cement industry plays a vital part of this infrastructure development. The fixing of cement prices by the three Companies and setting of trade conditions therefore undermined a competitive market and was detrimental to consumers.
While the Board of Commissioners takes cognisance of the role Mpande Limestone Limited, Dangote Cement Zambia Limited and Lafarge Zambia Plc, play in the economy in general and their contribution to employment creation, their conduct had the serious effect of undermining infrastructure development both private and public especially with Government’s continued thrust on infrastructure development projects from roads, schools, clinics and development of district centres among others.
Based on these facts, the Board decided to fine Lafarge Zambia Plc and Mpande Limestone Limited the maximum fine of 10% of their annual turnovers for the two (2) years of 2019 and 2020 for price fixing and market sharing. The Board noted that Dangote Cement Zambia Limited was granted leniency as they were the only Leniency applicant and assisted with investigations.
The Board would also like to take this opportunity to warn businesses that engage in Anti-competitive Business Practises to desist from such conduct. The Commission remains steadfast in its commitment to eliminate any anti-competitive trade practices, which impact negatively on Zambia’s quest to promote a competitive business environment and ensure that ordinary consumers are not exploited.
Cement Price Hike Investigation Concluded
The Competition and Consumer Protection Commission (CCPC) wishes to bring it to the attention of the public that it has been closely observing the operations of the market players in the Cement Market and did in fact institute investigations into possible cartel conduct in January 2020.
To this effect, the Commission wishes to inform the public that it has now concluded its investigation involving the three (3) cement manufacturing companies.
And will, in accordance with guidelines under the Competition and Consumer Protection Act No 24 of 2010, share the investigation findings with the involved parties to ensure adherence to due process, consequently to which the Board of Commissioners will adjudicate on the matter.
The Commission is alive to the high-level public interest in this matter and implores the public to exercise patience allowing the process to reach its logical conclusion at which point, the determination of the Board will be duly communicated.
Namukolo M. Kasumpa
CCPC Fines Seven Fish Fingerlings Producers and Distributors 9% and 10% of their Annual Turnover for Cartel Conduct
The Board of Commissioners of the Competition and Consumer Protection Commission (CCPC) has fined seven (7) Fish Fingerlings Producers and Distributors in Zambia upto 10% percent of their annual turnover for price fixing.
The decision to fine the companies was made during the 48th Board of Commissioners meeting on Adjudication of cases held on 5th February 2021. This was after a Commission initiated investigation in April 2020, which found that Fish Fingerlings Producers and Distributors were engaged in a cartel when they issued a public notice for an impending uniform price increment for the price of fish fingerlings.
The seven companies namely; Palabana Fisheries Limited, Mukasa Agro Solutions and Fish Farm Limited, Savana Streams Limited; and Chirundu Bream Farm Limited, First Hatch Investment Limited, Iban Aquafish Solutions and Consultancy Limited; and Msekese Fisheries Limited were involved in collusive practices contrary to Section 8 and 9 of the Competition and Consumer Protection Act (CCPA) No. 24 of 2010.
Further, the investigation revealed that there was no justification for all companies to have a common pricing policy as each company had different production and distribution costs, and would therefore not all take the same time to produce and distribute the fish fingerlings.
The Board noted that the objective of the restrictive agreement not only increased prices of fish fingerlings but also reduced customer choice as competitive pricing was eliminated.
Based on these facts, the Board of Commissioners decided to fine six (6) Fish companies 9% and of their annual turnover and Palabana Fisheries Limited 10% in accordance with Section 8 and 9 of the CCPA.
We would like to warn businesses that are engaged in collusive arrangements to desist from such conduct. The Commission remains steadfast in its commitment to root out collusive and anti-competitive practices which negatively impact on Zambia’s quest to promote a competitive business environment and an inclusive economy for job creation.