Johannesburg - The Competition Commission will make a submission by next Wednesday to the Competition Tribunal on the size of the penalty that SA Breweries (SAB) should pay if it is found guilty of contravening the Competition Act.
The penalty will relate to the commission’s allegation that SAB is involved in a collusive arrangement with its appointed distributors.
In addition, the commission has alleged that the arrangement with these distributors meant SAB, which controls about 90 percent of the local beer market, was engaged in resale price maintenance (price fixing) in contravention of section 5(2) of the Competition Act.
The commission has also suggested behavioural remedies for other alleged contraventions of the act by SAB.
One remedy that has already been rejected by SAB is that it pay the handling and distribution fees incurred by independent distributors as it does for the appointed distributors.
SAB has told the tribunal that this remedy would result in it incurring additional costs of at least R721 million a year. In its closing arguments, SAB said it could not do this.
“It [SAB] will instead convert the appointed distributors into depots, which do not get the handling and delivery fees, and [by] that way remove the discrimination complained of.”
In the final arguments heard by the tribunal earlier this week, SAB was scathing of the commission’s case against it.
“When all is said and done, this is a case that should not have been brought… we submit that the complaint referral must be dismissed.”
SAB’s counsel argued that the commission should be required to pay its costs because it had forced the brewer to fight a case that had no substance.
During the course of the long drawn-out proceedings before the tribunal, SAB frequently noted that the establishment of the appointed distributors had been part of its black economic empowerment programme. The brewer added that the opportunities created for black business people would be lost if the appointed distributors were converted into SAB depots.
Earlier this week, the tribunal heard final arguments in a case that was first brought to the commission back in 2004 by a group of liquor wholesalers and retailers led by the Eastern Cape-based Big Daddy Group.
Nico Pitsiladi, the director of Big Daddy, said it had been “almost impossible” for him to compete with SAB’s appointed distributors because they had benefited from more attractive discounts, which were not available to him. The tribunal hearings into the matter commenced in August 2010 but were dragged out due to a number of technical challenges by the legal team of the SABMiller subsidiary. - Business Report