A settlement agreement the firm concluded with the Competition Commission was confirmed by the Competition Tribunal yesterday.
The commission did not provide any indication of the percentage of Premium Brands’ turnover that the fine constituted because the company claimed this information was confidential.
Thandile Charlie, appearing for the commission, told the tribunal that the commission received a complaint from a third party in 2011 about the conduct and practice of Premium Brands in the market for photographic equipment.
Charlie said the complaint related to Premium Brands prohibiting its network of retailers from selling Nikon products at any price lower than its wholesale price plus a mark-up of 5 percent.
She said the commission concluded after an investigation that Premium Brands’ conduct was a contravention of the Competition Act.
Charlie said a number of aggravating and mitigating factors were taken into consideration in concluding the settlement agreement.
She said aggravating factors considered by the commission included the duration of the conduct from 2008 until 2012 and the fact the conduct related to advertised prices and retailers were able to monitor each other and call on Premium Brands to intervene when there were price discrepancies.
“As a result, this diminished and discouraged price competition between retailers in the market.” Charlie said the mitigating factors considered included that the conduct did not affect the intra-brand market for photographic equipment, Premium Brands co-operated with the commission and there was speedy resolution.
Members of the tribunal panel queried the wording of the settlement agreement in reference to the admission by Premium Brands that it co-ordinated the advertisement of the Nikon brand by co-ordinating prices at which the Nikon brand was advertised in a manner “which may have had the effect” of contravening a section of the Competition Act.
Imraan Valodia, a tribunal panel member, said there was not really an admission by Premium Brands in the text of the settlement agreement.
Sandhya Naidoo, appearing for Premium Brands, said the reason it had agreed to this wording was because it did not in fact contravene that specific section of the Act. Naidoo said no sanction was imposed on retailers if they did not follow requests by Premium Brands to advertise at certain prices.
“What we do admit is that there may have been strongly or loosely worded correspondence with retailers that may have been misconstrued but in fact was not misconstrued because the industry parties admitted in response to the commission that they set their prices as they wished.”
Naidoo stressed they were not prepared to scrap words “which may have had the effect of contravening section 5(2) of the Act” from the agreement because it might open up Premium Brands to civil damages.
“We strongly believe that Premium Brands did not contravene the Act and in which case we would proceed to a full hearing or full trial,” she said.
Naidoo stressed retailers were free to set their own retail prices. She said there were requests to advertise at certain prices but there was no sanction, adding retailers often deviated from or did not comply with the request and there were no repercussions.