30 June 2010 by

SAB matter to proceed - in part

The Tribunal has agreed to separate the adjudication of parts of the Commission's long-running complaint against SAB. SAB and 12 of its distributors have been at loggerheads with the Commission since November 2004, when a complaint was filed with the Commission by a number of liquor retailers and wholesalers. The complaint relates to a variety of alleged anti-competitive behaviours within the SAB's distribution system. The Commission referred the matter to the Tribunal at the end of 2007, and the hearing was slated to commence in August 2010 to cover a wide variety of allegations related to SAB's distribution system, as well other allegations of market abuse.

The "distribution case" includes allegations that SAB's distribution system prevented the 12 distributors from independently setting prices or selecting their customers. In addition, the distributors are not allowed to operate beyond their allocated territories and are barred from servicing customers in non-franchised territories, even at the insistence of the customers themselves. At the same time, it is alleged that SAB undertook not to make its pricing outside the territory so attractive that it might encourage the distributors' customers to purchase products from SAB directly.

Finally, SAB is accused of engaging in price discrimination by offering its distributors better prices compared to those offered to the complainants, who are competitors of the distributors. According to the Commission, these arrangements affect intra-brand competition in the downstream market, where SAB has a dominant share of the beer market.

With regards to the "market abuse case", the Commission alleges that SAB abused its market power by inducing retailers not to deal with SAB's competitors for the manufacturing and sale of beer. In this regard, the Commission regards SAB's provision of fridges, free trips to major rugby matches and direct payments of large financial incentives as contraventions of the Competition Act.

As it was not possible to hear the entire complaint in August, SAB argued that the Tribunal should first conclude a hearing and rule on the "distribution case", as further delay would result in continued uncertainty for distributors regarding the legality of their businesses.

Despite the Commission's opposition to the separation application (arguing that it will not be convenient in light of the overlapping of certain specific complaints), the Tribunal ordered the "distribution case" to be separately heard in August and that the hearing of the "market abuse case" be stayed pending the Tribunal's further directions.

Chris Charter, Director, Competition
Scarlate Nkiwane, Associate, Competition

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