The Competition Commission referred a complaint against Sasol Gas for excessive pricing of natural piped gas in South Africa to the Competition Tribunal on Monday, 11 July.
The Commission found that Sasol Gas has been charging mark-ups of up to 72% for almost a decade.
Natural gas is used as an energy source by industrial, commercial, and domestic customers, and Sasol Gas is South Africa’s sole supplier of natural piped gas.
The complaint was lodged in early 2022 by three entities, Egoli Gas, the Industrial Gas Users Association of South Africa (IGUA-SA), and Spring Lights Gas, who accused Sasol Gas of violating the Competition Act.
The Commission assessed the prices charged by Sasol Gas using publicly available information, comparing them to the costs of supplying natural gas. It found excessive mark-ups ranging from 55% to 72% over several years.
According to the Commission, “considering the landed cost of the gas molecule and the trading cost, the Commission found the average mark-ups per gigajoule by Sasol Gas to the three complainants were, on a conservative basis, as follows:
- IGUA-SA members were charged an excessive mark-up of 55% over nine years from 2014 to 2022;
- Egoli was charged an excessive mark-up of 72% over nine years from 2014 to 2022; and
- Spring Lights Gas was charged an excessive mark-up of 59% over five years from 2018 to 2022.
The Commission also determined that Sasol Gas’ pricing affected end consumers, as gas traders and industrial customers passed on the costs.
During the investigation, Sasol Gas failed to provide the requested information and instead challenged the Commission’s jurisdiction in court by filing a review application in the Competition Appeal Court (CAC).
However, the Competition Act only affords the Commission one year to investigate a complaint lodged by a member of the public unless extended by the complainant.
In this case, the one-year period has already lapsed, and one of the complainants has indicated that it is not amenable to granting any further extension pending Sasol Gas’ jurisdictional challenge in the CAC.
Therefore, in the public interest, the Commission referred the complaint to the Tribunal for prosecution before it lapses.