SOUTH AFRICA – The Competition Commission’s decade-long distribution case against brewer SAB has been thwarted once again, this time by the Competition Appeal Court.
The commission’s appeal was dismissed with costs in a judgment handed down in Cape Town on Monday, meaning its last option would be an appeal at the Constitutional Court.
Competition commissioner Thembinkosi Bonakele said “we haven’t decided yet” whether or not to refer the case to SA’s highest court.
The Competition Commission was appealing against the Competition Tribunal’s decision last year not to abolish SAB’s exclusive territorial agreements with its 13 appointed distributors.
While 90% of SAB’s distribution is done through its own depots, the remaining 10% is done through appointed distributors across the country. This portion has been under the spotlight since a complaint was made by an independent liquor distributor in 2004.
Long delays followed the referral of the case in 2007 to the tribunal, mainly due to procedural challenges put up by SAB. Its first successful attempt to get the case dismissed was put on ice when the commission appealed to the tribunal. When the case’s dismissal was upheld by the tribunal, the commission took the next step in the process by turning to the Competition Appeal Court.
Lara Granville, a director at law firm Norton Rose Fulbright, which represented the appointed distributors, said the decision provided “welcome clarity for dominant firms in SA regarding how they choose to structure their distribution”.
She said there had been, until now, uncertainty about how competition law should view a company that distributed its own product and also appointed external distributors.
“The issue was whether that raises price-fixing or market allocation concerns. The Competition Appeal Court has now clarified that these arrangements need not be considered as automatically illegal.”
The Competition Appeal Court found that the commission had failed to prove that SAB’s distribution arrangements were anticompetitive in that they inflated prices or reduced service levels.
The commission’s case is based on price discrimination, market allocation and retail price maintenance. The commission has argued that SAB had appointed distributors and given them exclusive territories in which to distribute its products‚ thus restricting competition between the various appointed distributors.