THE Competition Commission is going ahead with its appeal against the Competition Tribunal’s decision to dismiss the case against South African Breweries (SAB)‚ along with its independent distributors.
Acting commissioner Thembinkosi Bonakele said on Tuesday the case was critical for the commission which had invested a lot of time and resources over many years on it.
The case was not a fight about beer‚ but through it the commission was looking to advance crucial competition principles‚ said Bonakele.
The commission had asked for an administrative penalty of R1.85-billion to be imposed on the beer giant.
In the matter before the tribunal‚ the commission had sought an order that SAB remove the exclusivity section of its contracts with its appointed distributors and also extend the discounts offered to those distributors to a wider class of distributors.
The investigation of the exclusive arrangements between SAB and its 13 appointed distributors started in 2004 with a complaint from competitor Nico Pitsiladi of Big Daddy’s in the Eastern Cape. Pitsiladi said that he was unable to make margins on SAB products because he did not enjoy the same discounts as SAB’s appointed distributors.
However‚ the tribunal dismissed the case in March and ruled that the commission did not present sufficient evidence to prove that SAB’s distribution model lessened intra-brand competition between the appointed distributors.
The tribunal threw out the commission’s argument that SAB’s distribution model led to unjust discrimination against independent distributors and‚ ultimately‚ the consumer. The tribunal also found that no remedy was likely to have any great effect‚ given the fact that the case only attacked 10% of SAB’s method of beer distribution.
The tribunal held that even if the commission’s suggested remedy was imposed‚ to abolish the exclusive territorial agreement with its appointed distributors‚ SAB could simply move the distribution to its depots‚ which accounted for 90% of its distribution and were not under attack.
Bonakele insisted that the importance of the case related to the interpretation of the main issues – the abuse of dominance and minimum resale price maintenance.
“Our appeal is getting into the tests the tribunal has prescribed – where we think they might have missed it.
“We really want that clarified by the courts. It is about interpretation and principle‚” he said.
“We say all distributors compete with each other and it is not up to dominant firms to pick or choose winners.
“If the most efficient distributor is Joe Soap from wherever, there is no reason to advantage someone else by giving him favourite terms over Joe Soap. SAB has no business in interfering with the competition between distributors‚” Bonakele said.
The tribunal found that the appointed distributors were not competitors of SAB and that they never operated autonomously; were created to ensure lower prices to outlying areas; and that the arrangement with its appointed distributors to increase prices did not exist.
In the notice of appeal, the commission said the tribunal should have found that the arrangements were designed to maintain monopoly pricing to the detriment of consumers. — BDLive
Brewing discontent over SAB
Acting commissioner Thembinkosi Bonakele said on Tuesday the case was critical for the commission which had invested a lot of time and resources over many years on it.
The case was not a fight about beer‚ but through it the commission was looking to advance crucial competition principles‚ said Bonakele.
The commission had asked for an administrative penalty of R1.85-billion to be imposed on the beer giant.
In the matter before the tribunal‚ the commission had sought an order that SAB remove the exclusivity section of its contracts with its appointed distributors and also extend the discounts offered to those distributors to a wider class of distributors.
The investigation of the exclusive arrangements between SAB and its 13 appointed distributors started in 2004 with a complaint from competitor Nico Pitsiladi of Big Daddy’s in the Eastern Cape. Pitsiladi said that he was unable to make margins on SAB products because he did not enjoy the same discounts as SAB’s appointed distributors.
However‚ the tribunal dismissed the case in March and ruled that the commission did not present sufficient evidence to prove that SAB’s distribution model lessened intra-brand competition between the appointed distributors.
The tribunal threw out the commission’s argument that SAB’s distribution model led to unjust discrimination against independent distributors and‚ ultimately‚ the consumer. The tribunal also found that no remedy was likely to have any great effect‚ given the fact that the case only attacked 10% of SAB’s method of beer distribution.
The tribunal held that even if the commission’s suggested remedy was imposed‚ to abolish the exclusive territorial agreement with its appointed distributors‚ SAB could simply move the distribution to its depots‚ which accounted for 90% of its distribution and were not under attack.
Bonakele insisted that the importance of the case related to the interpretation of the main issues – the abuse of dominance and minimum resale price maintenance.
“Our appeal is getting into the tests the tribunal has prescribed – where we think they might have missed it.
“We really want that clarified by the courts. It is about interpretation and principle‚” he said.
“We say all distributors compete with each other and it is not up to dominant firms to pick or choose winners.
“If the most efficient distributor is Joe Soap from wherever, there is no reason to advantage someone else by giving him favourite terms over Joe Soap. SAB has no business in interfering with the competition between distributors‚” Bonakele said.
The tribunal found that the appointed distributors were not competitors of SAB and that they never operated autonomously; were created to ensure lower prices to outlying areas; and that the arrangement with its appointed distributors to increase prices did not exist.
In the notice of appeal, the commission said the tribunal should have found that the arrangements were designed to maintain monopoly pricing to the detriment of consumers. — BDLive
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