The challenges faced by stakeholders in the South African sugar industry are no secret. From the South African Sugar Value Chain Master Plan to 2030 (Sugar Master Plan), to the Conditional Exemption granted to the South African Sugar Association, and the Guidelines on collaboration in the implementation of the South African Value Chain Sugarcane Master Plan to 2030, South Africa’s competition authorities have proactively intervened in this industry in an attempt to stabilise it.
The latest intervention which has been proposed by the Minister of the Trade, Industry and Competition (DTIC), is the Block Exemption for the Implementation of Phase 2 of the Sugar Master Plan, 2025 (Proposed Block Exemption). The Proposed Block Exemption will operate within the wider ambit of the Sugar Master Plan. In particular, the Proposed Block Exemption will exempt specified conduct which will take place in fulfilment of phase 2 of the Sugar Master Plan, from the application of the Competition Act.
The Sugar Master Plan has been signed by various stakeholders in the sugar industry and aims to provide a framework to rehabilitate the industry. The first phase of the Sugar Master Plan entailed the stabilisation of the industry through various restructuring and detailed strategic planning efforts. The second phase, however, entails the formalisation of, and signing of agreements which give effect to the plan. The Proposed Block Exemption relates to this phase of the Sugar Master Plan.
The DTIC has now invited public comments on the Proposed Block Exemption and industry participants, specifically, those participants who may seek to obtain an exemption under these block exemptions when in force are encouraged to provide their inputs now and have their say on whether the proposal is workable – especially insofar as the block exemptions envisage collaboration to achieve effective price regulation within the sugar value chain.
The Proposed Block Exemption, envisages that the following conduct, which would ordinarily be considered anti-competitive, will be permissible, subject to the Commission’s authorisation:
- Collaboration in order to identify sugar products not intended for consumption that could potentially form part of the sugar market value chain;
- Collaboration to determine the prices that sugar producers will charge for their products (in line with the Sugar Master Plan); and
- Collaboration to determine the volumes of sugar which customers will obtain from local sugar producers.
Further, the conduct above will only be permissible if it is executed by:
- signatories to the Sugar Master Plan who are participants in the sugar market value chain (e.g. sugar cane growers, farmers, millers and refiners and processors); and
- customers of sugar products who collaborate with signatories of the Sugar Master Plan, even if they themselves are not signatories. This includes retail and wholesale sugar customers as well as customers who use sugar as an input in the production of good.
The Proposed Block Exemption will provide a unique opportunity for market players in the sugar industry to enhance the extent of their collaboration to give effect to the regulatory reform of the industry. The Proposed Block Exemption, in its current draft form, should therefore be considered carefully by all stakeholders in this industry.
Parties have until 20 June 2025 to comment on the Sugar Master Plan Proposed Block Exemption and are welcome to contact Leana Englebrecht at lengelbrecht@fasken.com if they require any further information.
