United National Breweries (UNB), which has just completed a transaction in which global spirits group Diageo acquired a 50 percent stake, said it welcomed competition but would not tolerate SABMiller abusing its dominant position in the market or indulging in predatory pricing.
Dick de Groot, UNB’s chief legal adviser, told Business Report yesterday: “We’re not going to sit back and take it as it comes.”
UNB has lodged a complaint against SABMiller with the Competition Commission, in which it alleges that SABMiller is indulging in predatory pricing and “springboarding”. In addition, SABMiller was “impeding UNB’s expansion in the market and inducing the wholesalers to not sell UNB’s products”.
The complaint, which was lodged with the commission on September 2, appears to stem from “marketing” activities undertaken by SABMiller’s Botswana-based Alliance Beverages in the North West town of Mahikeng, which is close to the Botswana border. The complaint concerns sorghum beer, a market that is dominated in South Africa by UNB with the Chibuku brand.
An SABMiller spokesman said Alliance Beverages was recently established to facilitate exports of traditional opaque beer from its Botswana breweries into South Africa.
“The business is still fledgling, has only been operating for a few weeks and is tiny in comparison to UNB,” the SABMiller spokesman said, adding: “We are confident Alliance Beverages is not involved in anti-competitive behaviour.”
UNB’s “springboarding” allegations relate to SABMiller removing UNB products from the shelves of wholesalers and replacing them with SABMiller products, “in order to utilise the customers and goodwill that UNB has built up with their customers”, the complaint said.
It also alleges: “Certain representatives of Eyethu [SABMiller’s product] have been informing customers of Chibuku that Chibuku is being phased out and is being replaced by Eyethu, but that it is the same product.”
On the predatory pricing allegation UNB’s complaint states that Eyethu is being sold for less than Chibuku. “Given the fact that Eyethu is produced in Botswana and accordingly incurs certain import duties and VAT, and taking into account that the buying up of all of the Chibuku product would have to be added to the costs, it is suspicious that Eyethu was able to be sold at a price lower than that of Chibuku,” the UNB complaint said.
SABMiller’s spokesman confirmed the group’s “unwavering commitment to operating in a way that is pro-consumer and pro-competitive”.
Alliance Beverages had purchased “a small amount” of Chibuku stock for the purpose of brand comparison and benchmarking “as is entirely usual at the time of entering a new market”, SABMiller said.
SABMiller’s local division, SAB, has not sold sorghum beer following its decision to sell Traditional Beer Investments to UNB about 13 years ago. Although UNB has the licence to sell Chibuku in South Africa, SABMiller holds the licence for Chibuku outside South Africa.
SAB spokeswoman Robyn Chalmers said yesterday that while SAB would always consider and assess new market opportunities, its current strategic focus was on clear beer.