Sasol Discovers Antitrust Violations, Triggers Probes

By Carli Lourens

Jan. 19 (Bloomberg) -- Sasol Ltd., South Africa’s largest fuel producer, triggered cartel probes into the country’s fuel and piped-gas industries after discovering violations of antitrust law during an internal review and notifying regulators.

“We hope there will be more competitive prices” after the probes, which will be “long and detailed,” said Simon Roberts, an economist at South Africa’s Competition Commission, in an interview today. Pricing of fuels such as diesel, not regulated by the government at retail level, will be scrutinized, he said.

All members of the South African Petroleum Industry Association, or Sapia, will be investigated, Roberts said. These members are BP Southern Africa Ltd., Shell South Africa Ltd., Chevron South Africa Ltd., Total South Africa Ltd., Engen Ltd. and state-owned PetroSA, according to the industry body’s executive director, Avhapfani Tshifularo.

“I’m not aware of any cartel,” Tshifularo said by phone today, adding that the issues raised by Sasol have yet to be fully studied. None of the oil refiners could comment immediately when contacted by Bloomberg News today.

Sasol, the world’s biggest producer of motor fuel made from coal, is cooperating with the Competition Commission, according to a statement from the Johannesburg-based company. Two violations were found at its gas unit, and findings of unlawful conduct at its Sasol Nitro division are now more likely, it said. Some activities at the Sasol Oil subsidiary may also be viewed as anticompetitive, the company said.

‘Sizeable’ Penalty?

The commission is in talks with Sasol over a settlement, and a “sizeable” administrative penalty may be levied in relation to the two Sasol Nitro issues, Roberts said.

The two complaints may now be considered valid after the review uncovered additional information, Sasol said. They concern a probe of trading in phosphoric acid and one of several complaints by a company called Nutri-Flo.

Sasol, which was fined 318 million euros ($412 million) in October by European Union regulators for allegedly participating in a wax cartel, unearthed the violations after the start in July of an internal review of compliance with competition laws. The company said today it was granted leniency for the violations at the gas unit after reporting the acts to the commission.

“The intense scrutiny of the review initiated last year is unfortunately indicating areas of concern,” Chief Executive Officer Pat Davies said in the statement. “Our values do not leave any room for unethical behavior.”

Shares Retreat

Sasol fell 13.01 rand, or 4.5 percent, to 276.99 rand in Johannesburg trading, rebounding from a drop of as much as 6.6 percent. The stock has slid 13 percent in the past year, cutting the company’s market value to 176 billion rand ($17 billion).

“Because Sasol is the whistleblower, there is a smaller chance that they’ll incur the maximum penalty,” Nedcor Securities analyst Mohamed Kharva said by phone today from Cape Town. “There may still be a fine, but it’s very early to say what will be the impact.”