Liquor giant Distell and black-owned duty-free business Nu Africa’s battle continued yesterday in front of the Competition Tribunal over the sale of alcohol to diplomats.
This follows Distell stopping supplying liquor products to Nu Africa as it alleged that products supplied to Nu Africa on a duty-free basis had made their way into the South African duty-paid market, a form of illicit alcohol trading known as “tax leakage”.
Nu Africa denied Distell’s claims and was now accusing Distell of abuse of dominance.
Nu Africa supplies duty-free liquor, among other products, to diplomats and marine travellers through their off-licence retail outlets in Pretoria and Cape Town.
Distell, in turn, manufactures liquor products and has supplied duty-free liquor to Nu Africa, in accordance with the terms and conditions in a supply agreement.
Distell owns brands that include Amarula, Three Ships, Durbanville Hills, Nederburg, Savanna, Bain’s, Harrier and Richelieu.
In previous submissions to the Tribunal, Nu Africa claimed that since Distell stopped supplying them with the liquor in wholesale duty-free deals, they had purchased Distell products from competitors.
Nu Africa self-brought the matter to the Tribunal hoping that Distell would be ordered to reinstitute supplying them with liquor, citing that the stoppage had negatively affected its profits.
On Tuesday, Sarah Truen, Nu Africa’s economic expert, argued that Distell did not give Nu Africa information on duty-free liquor leakages and yet it refused to supply it.
She said the SA Revenue Service (Sars) and The Department of International Relations and Co-operation (Dirco) regulated the excise of duty-free alcohol, and as retailers, there were rules that they had to abide by to prevent leakages.
“Once the product leaves the store, Nu Africa has a limited ability to track the physical movement of the product. They could help Distell to track the movement of the product if Distell would give them information on what product did it find in the market? Where was it found? Distell is not giving Nu Africa that kind of information. It is not involving them in the process and helping in trying to track what was happening in the physical movement of the product,” Truen said.
She said Distell’s refusal to supply Nu Africa on this lack of information basis had led to competitive damage.
The Competition Commission, which investigates abuse of dominance matters before deciding whether or not to refer such cases to the Tribunal for prosecution, decided not to refer this matter. Nu Africa subsequently self-referred the matter to the Tribunal.
The hearing will continue on Wednesday.
BUSINESS REPORT