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Press Release Johannesburg, 23rd January 2002
Sappi Limited today issued a statement clarifying the facts
around recent media comment on the Papercor dispute currently before the Competition Tribunal.
Sappi sells its products throughout the world primarily through paper wholesalers. Sappi requires these
wholesalers to have large warehousing, administration and
marketing capability to hold and distribute a diverse range
of paper products. Papercor receives its supplies from such wholesalers.
In April 1997 Papercor requested Sappi to supply it
directly. Papercor's request included an application for
credit. The financial information provided by it did not
allow for the granting of unsecured credit, and it was also
unable to provide adequate security. Obviously, Papercor
could always have bought from Sappi on a cash basis.
Two years later, through its attorney, Papercor demanded
that Sappi supply paper directly to it on the same
conditions applicable to the large paper wholesalers.
Despite requests to do so, Papercor has not indicated how it proposes to pay for the supplies it demanded.
Furthermore, it has not supplied Sappi with either audited,
or even complete unaudited financial statements, or
adequate financial security for the approximately R7- million credit facility which it would require.
In April 2000, without further discussion, Papercor
launched proceedings against Sappi and certain paper
wholesalers before the Competition Tribunal, claiming
collusion between Sappi and the wholesalers and that Sappi
be forced to supply it on the same basis as the other large paper wholesalers.
Papercor lost its case against the paper wholesalers and
was ordered to pay their costs. Papercor did not proceed
with its case against Sappi, but chose to re-enter
negotiations for a direct supply agreement with Sappi.
During these discussions Sappi indicated that Papercor
should contribute towards Sappi's legal costs incurred in
defending Papercor's earlier failed proceedings against
Sappi. Papercor terminated discussions and lodged a new
complaint with the Competition Commission claiming that
Sappi was linking payment of these legal costs to a supply
agreement in contravention of the Competition Act.
The Commission referred the matter to the Competition Tribunal and recommended that Sappi be fined.
On 10 April 2002 the Tribunal heard this new matter. Sappi
contended that the Commission had failed to present a valid case. The Tribunal found in Sappi's favour. The Tribunal, however, offered the Commission an
opportunity to try to make a proper case and gave it ten (10) days in which to amend its papers.
Sappi continues to maintain that it did not contravene the
Competition Act and that it did not abuse its market
position. All Papercor needed to do, to trade directly
with Sappi on the same basis as the other major paper
wholesalers in South Africa, was to buy the minimum
required quantity and to provide acceptable security for
the approximately R7-million credit it would require. It is unclear why Papercor has failed to do this. ends
Released on behalf of Sappi by Brunswick, telephone + 27 11 442 8803 For further information contact:
Andre F Oberholzer, Corporate Affairs and Communication Manager Sappi Limited +27(0) 11-407 8044 work (direct) +27(0) 11-403 8236 fax +27(0) 82-906 0638 cellular andre.oberholzer@za.sappi.com
