Senwes looks at next step after losing appeal
Group may take tribunal to Supreme Court of Appeal
November 16, 2009
By Florence de Vries
Agro-processing group Senwes may take the Competition Tribunal on in the Supreme Court of Appeal after its appeal against the tribunal failed at the weekend.
The Competition Appeal Court dismissed Senwes's case after the tribunal ruled in February that the group had engaged in margin squeezing in 2003 in the grain storage and trading markets.
The Competition Appeal Court also dismissed the Competition Commission's cross-appeal against the finding by the tribunal that Senwes' impugned conduct should have been classified as a species of price discrimination and should have been assessed in terms of different sections of the Competition Act.
Senwes had denied grain traders the benefit of a yearly storage discount, which they had previously enjoyed.
A margin squeeze occurs when a dominant firm in an upstream market, like Senwes, supplies rivals, with which it competes in a downstream market, in a manner that prevents rivals from making an economically viable price-cost margin.
The Competition Act does not allow for a fine to be imposed as it was the group's first offence.
Elmarie Joynt, a legal adviser to Senwes, said the group noted Judge Dennis Davis's judgment on Friday and that it would study the reasons for the dismissal of the appeal.
"We can either accept this decision or take it to the Supreme Court of Appeal if we do not agree with the reasons given," she said.
The group would carefully consider the ruling before deciding its next step.
"If we go to the Supreme Court of Appeal, it would likely be because we feel the judge did not take all the evidence into account," she said. Were the group not to go that route, the commission would be called in for a remedy hearing to give Senwes advice on how to change its practices, she said.
The tribunal had found earlier that Senwes owned a near monopoly in silo capacity in its area - a crucial area of grain production for the country.
The majority of its silos are in the Free State and to a lesser extent in North West, Gauteng and Northern Cape. It was found that a change in practice raised the costs of rival traders.
Prior to 2003, traders and farmers paid a daily storage fee up until 100 days to Senwes. Thereafter storage was free until the end of that season. This allowed traders the freedom to sell grain late in the season without being burdened by heavy storage costs.
In May 2003 Senwes removed the capped tariff from traders and offered it only to farmers. Traders storing grain for longer than 100 days continued to pay the daily tariff.
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