THE Competition and Tariff Commission has barred Hunyani Holdings and Art Corporation (Art) from using their joint venture company, National Waste Coll
ections (NWC), to create a monopoly in the country’s waste paper collection industry, businessdigest established this week.
This follows the commission’s investigation into allegations of restrictive and unfair business practices in the industry.
The two companies were given the order in terms of section 31(2) of the Competition Act, 1996.
“Hunyani Holdings and Art Corporation have been ordered not to use their joint venture company, National Waste Collections, to block entrants into the waste paper collection industry,” Alexander Kubuda, director of the Competition and Tariff Commission, said in a statement issued this week.
Kubuda said Hunyani and Art had been ordered to allow other waste paper collection firms, other than NWC, who meet the paper mills’ quality standards to deliver waste paper direct to the mills.
“These standards must be known to all the players,” he added.
Kubuda said the order had already been lodged with the Registrar of the High Court in terms of the Competition Act, 1996 for registration and enforcement purposes.
The Competition and Tariff Commission resolved to undertake a full-scale probe into the allegations in February last year, after having carried out preliminary investigations into similar issues in 2002.
“The full-scale investigation was largely based on evidence collected from stakeholders in the form of written presentations and oral submissions … in October 2005,” Kubuda said.
However, after the 2002 investigations, the commission resolved that the alleged practices were not materially restricting competition in the relevant market.
“New information on the allegations had been supplied by Recycle It Services Ltd, a waste paper collection agent and this led to the full-scale investigation,” Kubuda said.
He said the new information exposed the existence of anti-competitive agreements or arrangements, both vertical and horizontal, between and amongst all the local paper mills which use waste paper in their production processes on the one hand, and between the paper mills and NWC on the other.
The new information also pointed out the possible abuse of dominance, or monopolisation and the conclusion of an anti-competitive merger by the paper mills through the joint venture formation of NWC.
Kubuda said after the investigations, the commission came to the conclusion that the establishment of NWC created a virtual monopoly situation in the industry, and emerging waste paper collection enterprises were being restricted from directly delivering waste paper to the mills owned by Hunyani and Art by being directed to deliver the paper through NWC.
Zimbabwe has three major paper mills. These are Kadoma Paper Mills (KPM), Mutare Board and Paper Mills and Hunyani Pulp and Paper Division.
Art is the holding company of both Mutare Board and KPM.
KPM is the major supplier of fine paper of the printing industry while Hunyani are mainly producers of brown paper and cardboard boxes.
“There is a positive correlation between the level of economic activities in a given economy and the amount of waste paper generated by that economy,” said Kubuda.