Hearings into SAB practices resume

FMCG SUPPLIER NEWS

IOL Business - Jul 23rd, 09:20

The Competition Tribunal will resume a hearing into allegations of anti-competitive behaviour by South African Breweries (SAB), the local division of SABMiller.  

The complaints against SAB, which controls about 90 percent of the South African beer market, were first brought to the Competition Commission back in 2004 by a group of liquor wholesalers and retailers led by the Big Daddy group.

The commission investigated the complaint and in 2007 announced that it would proceed with a case against SAB and its appointed distributors.

On the basis of its investigation, the commission alleged that SAB’s agreements with its appointed distributors had the effect of dividing the market between competitors in contravention of the Competition Act. The commission also alleged that SAB favoured its own distributors at the expense of independent distributors and, in that way, placed independent distributors at a disadvantage.

Nico Pitsiladi, the director of Big Daddy, said it had been “almost impossible” for him to compete with SAB’s appointed distributors because they benefited from more attractive discounts than he was able to secure from SAB.

While SAB has vehemently and consistently argued that it does not indulge in anti-competitive practices, its legal team has caused the tribunal hearings to be postponed on a number of occasions as a result of technical legal challenges.

On Friday, SAB strategy director Yolanda Cuba told Business Report: “We remain confident that none of our practices are in breach of the law and that we have not engaged in any anti-competitive behaviour. We welcome competition as the company believes that it results in greater choice, innovation, higher quality and lower prices for consumers.”

The tribunal hearings into the case commenced in August 2010 but, for technical legal reasons, were suspended until March 2011. The following month, the tribunal granted an application, brought by SAB, to dismiss the commission’s case on procedural grounds.

SAB argued that the commission’s allegations before the tribunal had strayed beyond the original complaint by the Big Daddy group.

In agreeing to SAB’s application, tribunal chairman Norman Manoim referred to previous rulings by the Competition Appeal Court (CAC) and the Supreme Court of Appeal and said these rulings indicated he did not have jurisdiction to hear the commission’s case against SAB.

Manoim stated that, on the basis of recent precedent set in the Yara and Woodlands Dairy cases, it appeared the commission did not have the ability to amend the initial allegations lodged by the Big Daddy group. The commission appealed the tribunal’s ruling to the CAC.

In November last year the CAC overturned the tribunal’s decision and stated that the tribunal had applied the precedents too rigidly to the facts of the SAB case.

When the hearing resumes the commission will call its economic expert, Simon Roberts. After Roberts, the tribunal is expected to hear evidence from SAB’s appointed distributors and other factual and expert witnesses.

The hearing is scheduled to run until August 16 with closing arguments on September 2 and 3. © Independent On-line 2013. All rights reserved.