A lengthy legal battle has seen the Pretoria High Court rule against the now defunct Steinhoff over allegations of price fixing,
Image: Henk Kruger/Independent Newspapers
An extensive and lengthy legal battle, which went through several courts, has just seen the Pretoria High Court rule against the now-defunct Steinhoff over allegations of price fixing, paving the way for the matter to ostensibly proceed.
The judgement reverses a previous one after the Competition Commission was granted leave to appeal by the Supreme Court of Appeal. It means that an alleged price-fixing matter involving PG Bison – indirectly owned by Steinhoff – and a firm with which it should have been in competition, Sonae, proceeding to the Competition Tribunal.
However, the issue is only moving ahead six years after the Commission decided to refer the complaint to the Tribunal and some 18 months after Steinhoff, which imploded in 2017 after Deloitte flagged accounting irregularities, was delisted from both the Frankfurt and Johannesburg bourses and liquidated.
The judgement, handed down about two weeks ago, is the latest in the ongoing Steinhoff saga. The matter has gone through a complicated legal process, having started in 2016 when the Commission raided PG Bison and Sonae on “reasonable grounds to suspect that PG Bison and Sonae have engaged in collusive practices”.
In November 2019, the Commission decided to send the alleged price fixing matter to the Competition Tribunal. Steinhoff took umbrage at this and went to the High Court to have the Commission’s decision set aside, arguing that it did not contravene the specific aspect of the Competition Act that deals with price fixing. It won its application for a review of the Commission's referral, although it was subsequently added to the complaint that was sent to the Tribunal.
After Steinhoff won its bid to have the referral set aside, the Commission ended up back to the High Court because it wasn’t happy that the initial ruling didn’t contain full reasons for the decision to allow Steinhoff to have the matter reviewed. It asked for a “full reconsideration of the review application”. At this stage, Steinhoff argued that this request was “not competent”.
PG Bison and Sonae allegedly colluded in terms of percentage price increases for wood-based panel products. They were, at the time, the largest companies in South Africa when it comes to manufacturing wood-based panel products, which are used to build cupboards.
PG Bison was owned by Steinhoff via its KAP subsidiary before Steinhoff collapsed in what is South Africa’s largest spectacular explosion after Deloitte’s revelation, which resulted in Steinhoff losing Steinhoff lost 97% of its market capitalisation between August 2017 and March 2019 as investors fled.
A PwC investigation found that, in total, €6.5 billion – or R125bn – illegitimately went through Steinhoff's books between 2009 and 2017 until the news of South Africa’s biggest corporate scandal emerged.
In what appears to be more accounting shenanigans, KAP bought PG Bison from Steinhoff in October 2011. A year later, Steinhoff’s acquisition of KAP was unconditionally approved by the Competition Tribunal after Steinhoff increased its stake in KAP to 84% in a swap for PG Bison.
In 2012, when the alleged price fixing started, Steinhoff had indirect control over PG Bison. The judgement contains details to the effect that Steinhoff reduced its shareholding in KAP from 62% to 44% between 2015 and 2016 – although it remained KAP’s single-largest shareholder.
Yet, the judgement noted that internal paperwork showed that former and now deceased CEO Markus Jooste “was making direct contributions to the strategy of PG Bison”.
That Jooste, who apparently killed himself last March, had strategic input is not surprising given that this is a theme that comes up several times in PwC’s investigation report.
KAP did not respond to a request for comment. A statement on KAP’s website, dating to 2020, said that PG Bison had cooperated with the Commission and, as a result, asked for leniency.
“In March 2019, unbeknownst to PG Bison and KAP, the Commission concluded a settlement agreement with Sonae,” KAP’s statement reads, noting that Sonae was fined R47 million, to be paid in six instalments. As a result, PG Bison’s application for leniency was denied, it said.
The Commission also did not respond to a request for comment. Ibex, which has stakes in Pepkor, in addition to Mattress Firm and Pepco, said “we have reviewed the judgement, and we are considering our options, including a possible appeal”.
IOL
