The Competition Tribunal has refused to confirm a consent agreement entered into between the Competition Commission and AECI, Foskor, Omnia Fertilizers and Sasol South Africa, on the basis of irrationality.

The respondents are equal partners in an ammonia terminal facility, the RAMM facility, in Richards Bay, KwaZulu-Natal.

The RAMM enables the respondents to store, import and export ammonia. They had entered into a partnership agreement to regulate their relationship in relation to the facility.  

The commission in 2012, launched an investigation against the companies, alleging that the respondents agreed to fix the price at which they sell ammonia to each other.

The respondents agreed on a formula, contained in Clause 12 of their partnership agreement, to be used to determine the price at which they would sell ammonia to each other, should they be unable to agree on a purchase price on a bilateral basis. 

The commission found that Clause 12 of the partnership agreement had the potential effect of substantially preventing or lessening competition in the ammonia market.

The commission also found that there were cost-saving benefits to the respondents jointly storing their ammonia stock at the RAMM facility, as it was the only ammonia storage facility in Richards Bay. 

The parties had, as part of the consent agreement entered into with the commission, undertaken to remove Clause 12 from their agreement and instead agreed that, should the parties be unable to reach a bilateral agreement on the purchase price of ammonia, the requesting party will be entitled to withdraw the requisite amount of ammonia from the RAMM facility on a loan basis, provided that the same amount of ammonia is returned to the facility by the requesting party in a period specified in the agreement.  

The tribunal said it was not clear from the consent agreement what section of the Competition Act the respondents had contravened and said the commission had neglected to establish a proper theory of harm.

The tribunal further noted that the consent agreement established no coherent theory of harm as the commission neglected to allege a prohibited practice perpetrated by the respondents.