Omnia Fertiliser Zambia Limited and Nyiombo Investments Limited have been accused of unfavorable dealings and robbing government and the Zambian people huge sums of money estimated at over US$ 20 million over the years the two companies were distributing fertilizer.
Consumer Competition and Protection Commission (CCPC) public relations officer Hanford Chaaba said the two firms participated in anti-competitive business practices aimed at dividing the markets in the supply of fertiliser under the Farmer Input Support Programme (FSIP).
Mr Chaaba said the two companies have been fined 5% each of their annual turn over for the period 2007 and 2011 for their participation in the cartelistic behaviour during the supply of fertiliser during the said period.
“The two have been fined 5% each of their respective annual turnover in accordance of Section 9 (3) of the Competition and Consumer Protection Act No. 24 of 2010 (‘the Act’).
“The Board further decided that both Omnia and Nyiombo should be prosecuted in accordance with Section 9 (2) of the Act,” Mr Chaaba said.
The Commission in a statement released to the Daily Nation announced that the second Board Meeting on Adjudication of cases held on 26th April, 2013, established that;
“The agreement entered by the two firms showed that they had expressly stated that the two companies shall cooperate in the distribution and supply of fertiliser in Zambia and that the primary objective is for each company to focus on supplying and distributing fertilizer in the allocated zones where it has sustainable competitive advantage.”
Mr Chaaba said the Board discovered that the two companies would give advantage to each other by not bidding each time the other was involved in a tender.
He said the Board further observed that the two companies were exchanging information relating to the prices of fertiliser and noted that Nyiombo and Omnia appeared to have engaged also in bid rigging during the tendering for fertiliser under FISP.
According to the statement, Section 9(1) (a), (b), and (c) of the Act provides that a:“horizontal agreement between enterprises is prohibited per se, and void, if the agreement-fixes, directly or indirectly, a purchase or selling price or any other trading conditions; divides markets by allocating customers, suppliers or territories specific types of goods or services and involves bid rigging, unless the person requesting the bid is informed of the terms of the agreement prior to the making of the bid”.
CCPC Executive Director Chilufya Sampa said that he was glad that government this year has opened up the fertilizer supply to other companies and with this new competition, expect the cost of the commodity was expected to come down in the long run.
“As a Commission, we would like to warn all enterprises engaged in cartelistic behaviour to stop the conduct as the penalties when caught are very high.
“You may wish to know that our leniency programme is in place and that it is possible to get immunity from fines should you or your company be the first to report a cartel to the Commission. I would advise you to take advantage of this programme as soon as possible.”
Last year, CCPC conducted unannounced searches at Nyiombo and Omnia on allegations that the two were engaged in a cartel for the supply of fertilizer.