Johannesburg — SASOL's costly experience with the European competition authorities illustrates yet again just how high are the risks for SA companies going into joint ventures abroad.

The European Commission has fined Sasol € 318m for its participation in a nine-member cartel that fixed prices and parcelled out markets in Europe's paraffin wax industry from 1992 to 2005.

Sasol's share is almost half of the total of  € 676m in fines to be paid by the nine, which include oil majors such as Total, Exxon Mobil and Shell. The commission upped Sasol's fine 50% on the grounds that it was the cartel leader but then cut it 50% because Sasol was the second company (after Shell) to come forward to blow the whistle on the cartel. That enabled it to take advantage of the corporate leniency policy under which whistle-blowers gain immunity from prosecution.

Even so, Sasol's fine was horribly high, especially given that the turnover of its entire wax business (in SA and in Europe) in the latest year was less than R1bn. The experience must be all the more bitter because Sasol gained full control of the Hamburg-based wax business only in 2002, after it bought out its joint venture partner in the business, Schumann Wax. The joint venture dated back to 1995, not long after the cartel began. But cartels are secretive by their very nature, not to mention illegal, so it was not likely the executives involved were going to tell all to their new shareholder. And joint ventures are anyway only a partial form of control.

Either way, Sasol clearly didn't know what was going on; when it found out in 2005, it immediately offered to co-operate with the European commission. But too late, it seems, to avoid a steep fine.

It probably is a lesson for all South African companies about the risks of offshore ventures, especially joint ventures. The wax case is also a reminder, yet again, of the efficacy of corporate leniency policies in catching cartels. SA's Competition Commission has also made good use of these. Nothing should be done to undermine the effectiveness of these policies.