Johannesburg - Two complaints of abuse of dominance against the Uniplate Group, a manufacturer and supplier of vehicle number plate embossing machines and number plate blanks, have been referred by the Competition Commission to the Competition Tribunal.
The number plate embossing machines and number plate blanks are used by embossers to produce the final embossed number plates, which are then sold to motorists and motor vehicle dealerships.
The referral follows an investigation conducted by the commission following two complaints received from number plate embossers, New Number Plates Requisites (NNPR) and number plate blanks manufacturer JJ Plates and Signs (JJ Plates).
Itumeleng Lesofe, a spokesman for the commission, said yesterday that the commission was applying to the tribunal for an interdict to restrict Uniplate from engaging in such conduct that contravened the Competition Act and the imposition of an administrative penalty of not more than 10 percent of Uniplate’s turnover in South Africa. Lesofe said the first complaint was lodged by NNPR on June 26, 2012, and alleged, among other things, that Uniplate had contravened the Competition Act by requiring its embosser customers to purchase all of their requirements for number plate blanks from Uniplate.
He said NNPR claimed this conduct disadvantaged other manufacturers of number plate blanks because most of the embossers had exclusive contracts with Uniplate.
Lesofe said JJ Plates lodged a similar complaint on February 7, 2013, and alleged Uniplate was contractually obliging it to purchase all of its number plate blanks from Uniplate, which prevented it from sourcing from other suppliers who offered cheaper prices.
Inflated costs
He added that JJ Plates also alleged that Uniplate’s conduct had inflated its costs and put pressure on its business.
Lesofe said the commission’s investigation revealed that Uniplate held a dominant 75 percent market share in markets related to the manufacture and supply of number plate blanks in South Africa.
He said Uniplate also had a dominant 59 percent market share in markets for the manufacture and supply of embossing machines and had entered into long-term exclusive agreements with a number of embossers. “In terms of these agreements, embossers are required to exclusively purchase their number plate blanks from Uniplate when acquiring a Uniplate embossing machine.
“In other words, Uniplate uses its supply agreements relating to embossing machines to secure sales for its number plate blanks,” he said.
Lesofe said embossers contracted with it were also only allowed to source from alternative suppliers of number plate blanks if Uniplate was unable to supply them. He said the duration of these exclusive agreements was usually 10 years, without the option of cancellation within this period.
Lesofe said Uniplate used third party distributors and two of these distributors, Teqplate and Baleka, had also adopted Uniplate’s business model. He said the effect of Uniplate’s conduct was that competing manufacturers of number plate blanks were prevented from gaining access to a significant number of embossers, which also denied embossers the benefit of purchasing number plate blanks from other manufacturers.
Lesofe said the commission found that the prices charged by Uniplate for its number plate blanks were generally higher than the prices charged by its competitors.
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