Johannesburg — The complaint against tyre industry players for contravening competition law will now be adjudicated by the Competition Tribunal, following an investigation launched over two years ago, said the Competition Commission yesterday.

The commission has requested the tribunal to impose an administrative penalty amounting to 10% of the total turnover of each of the tyre industry players found guilty of running a cartel, which ultimately affects consumers.

The SA tyre manufacturers conference (SATMC), Apollo Tyres SA, Goodyear, Continental Tyres and Bridgestone were accused of collusive tendering, price fixing, information exchange and market allocation in April 2008.

The tyre manufacturers' cartel concerns the manufacture and supply of passenger tyres, light truck and commercial tyres, truck and bus tyres, off-road tyres, agricultural tyres and earthmover tyres in SA.

The complaint was brought forward by Parsons Transport, which alleged that tyre manufacturers co-ordinated price adjustments, prompting so-called "dawn raids" at each of the manufacturers' offices.

Parsons Transport said that tyre prices would go up by several percentages every two to three months before the April 2008 investigation.

In its application for leniency, Bridgestone admitted that it held telephonic discussions and met with its competitors between 1999 and 2007 "to agree in principle that they should cooperate to ensure stability in the market," said the Competition Commission.

The meetings were allegedly attended by tyre manufacturers' sales and marketing representatives who co-ordinated the timing and the average percentage price increase of tyres, agreed on the discount structure to be given to tyre dealers as well as the messages given to the market explaining the increases.

Business Day reported in April 2008 that Bridgestone justified price increases saying they were dictated by the market and related to sharp oil price increases.

The company also said that the exchange rate was a factor as most of its input material was imported.

Yesterday, Bridgestone said it had been granted conditional leniency for its past involvement in contraventions of the Competition Act.

"The company will continue to co-operate with and assist the Competition Commission throughout the complaint process and accordingly, it would be inappropriate for Bridgestone to provide any further details of the complaint or the leniency at this stage as the matter is before the Competition Tribunal for determination."

Meanwhile, the commission's investigation found that the SATMC was used as a platform for what has been termed "coffee-table discussions" to determine price increases and general co-ordination in the market among tyre manufacturers.

The importers of tyre products namely Yokohama southern Africa and Michelin Tyre Company were not involved in the cartel conduct, said the commission.

The main customers of the participants to the cartel are tyre dealers who purchase tyres for resale to consumers, vehicle manufacturers who purchase tyres and the government which produces tyres for state-owned vehicles and fleets.