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Competition Act, 1998 (Act No. 89 of 1998)

Notices

Guidelines on collaboration in the implementation of the South African Value Chain Sugarcane Master Plan to 2030

6. Framework for Collaboration on Local Sugar Procurement

 

6.1 As discussed in section 3, the Sugar Master Plan sets out a three-year procurement plan for increasing the sourcing of local procurement of sugar with the object of securing the local procurement of at least 150 000 tonnes in year 1, increasing in year 2 and restoring at least 300 000 tonnes in year 3. In order to achieve the 150 000 tonnes in year 1, retailers, wholesalers and industrial sugar users have committed to sourcing at least 80% of all sugar requirements from the local sugar industry. Similarly, in order to achieve the 300 000 tonnes in year 3, retailers, wholesalers and industrial sugar users have committed to sourcing at least 95% of all sugar requirements from the local sugar industry.

 

6.2 In the implementation of the three-year procurement plan, the sugar industry commitments made in the Sugar Master Plan necessarily have to be translated in two categories of local procurement targets:
6.2.1 the first category is industry local procurement targets; and
6.2.2 the second category is individual firm local procurement targets.

 

6.3 The industry local procurement targets and the individual firm local procurement targets may include targets for product categories such as refined sugar and brown sugar.

 

The process of setting industry local procurement targets

 

6.4 The process of setting industry local procurement targets may require discussions among retailers, wholesalers, and industrial sugar users. These discussions must be led by the DTIC or an independent facilitator appointed by the DTIC. No competitively sensitive-information or disaggregated information must be shared or discussed among retailers, wholesalers, and industrial users in the collective discussions on industry local procurement targets. Only aggregated information on the percentage and volumes of industry targets on local procurement can be shared and discussed among retailers, wholesalers, and industrial sugar users. The participation by retailers, wholesalers, and industrial sugar users in the discussions on industry local procurement targets in the implementation of the Sugar Master Plan does not amount to a contravention of section 4(1) of the Act.

 

6.5 The final industry targets must be determined by the DTIC or a facilitator appointed by the DTIC. In determining the industry targets, the DTIC or a facilitator appointed by the DTIC may obtain competitively-sensitive information on a bilateral and confidential basis separately from each individual firm, and this individual firm’s information may not be shared or discussed in the collective discussions among retailers, wholesalers, and industrial sugar users.

 

6.6 Retailers, wholesalers, and industrial sugar users must not engage in collective procurement of sugar from suppliers and such conduct may constitute a contravention of section 4(1) of the Act. To the extent that a need has been identified for collective procurement among a specific category of users such as small retailers and small independent wholesalers to optimise procurement efficiencies, an exemption must be sought from the Commission in terms of section 10 of the Act.

 

The process of setting individual firm local procurement targets

 

6.7 The process of setting individual firm local procurement targets in the implementation of the Sugar Master Plan must be conducted on a bilateral and confidential basis between the DTIC or an independent facilitator appointed by the DTIC and the individual firm.

 

6.8 The DTIC or an independent facilitator appointed by the DTIC may obtain competitively-sensitive information from an individual firm for the purpose of reaching an agreement with the firm on its local procurement target(s), and this information must not be shared with other market participants. An agreement between the DTIC and an individual firm on its individual local procurement target(s) does not amount to a contravention of section 4(1) of the Act.

 

6.9 Progress reports on the achievement of milestones set out in the individual firm’s local procurement plan in the implementation of the Sugar Master Plan must be submitted to the DTIC on a bilateral and confidential basis.

 

Demand forecasting

 

6.10 The Sugar Master Plan also includes industry commitments to providing timeous demand forecasting guidance to sugar suppliers to facilitate sugar industry planning against local sugar availability and supply commitments.

 

6.11 Individual firm demand forecasts must be provided on a bilateral and confidential basis to the DTIC or an independent facilitator appointed by the DTIC. The DTIC or its appointed facilitator must aggregate the individual firm demand forecasts.

 

6.12 The demand forecasting guidance provided to suppliers by the DTIC or an independent facilitator appointed by the DTIC must only contain aggregated information and must not contain firms’ individual procurement plans and information.