- CA suspected resale price maintenance by Trident
- resale price maintenance Practice contravenes Competition Act
- CA orders Trident to undertake remedial action
Trident Cash & Carry, was found by the Competition Authority to have engaged in anti-competitive conduct in the form of resale price maintenance in contravention of section 26(1) of the Competition Act (CAP 46:09) and the wholesale has since been ordered to undertake remedial actions to normalize the concern.
In July 2017 the Competition Authority queried the Banner Group model operated by Trident Holdings following a competitive analysis of the Wholesale and Retail sector in Botswana that the authority conducted in 2013. When assessing the Wholesale and Retail sector in Botswana, the Competition Authority was of the view that retail price maintenance agreements could be a common place in the wholesale and retail sector. Price maintenance is an agreement between a wholesaler and a retailer not to sell a commodity or product below a specified price. The Authority carried out a number of competition analyses.
One of the analysis carried out involved Trident Wholesalers. Trident acts as a wholesaler of grocery products and general merchandise to independent retailers throughout Botswana. It operates Banner Groups under the trade brand names Big 11, Fair Price and Saverite in which Banner Group members participate on a voluntary basis in monthly promotional activities undertaken under each Banner Group. In addition to the extensive trade and retail support that Trident offers to about 500 (five hundred) independent retailers on its Banner Group member base, it has managed to offer highly competitive prices to these local retailers throughout Botswana by means of group purchasing power and supply chain management. An important tool of the Banner Group model involves the use of monthly promotions in which Trident and Banner Group members jointly advertise promotional products in promotional pamphlets produced by Trident at a nominal cost to the members. The Competition Authority was concerned that through the use of the aforesaid pamphlets, Trident had engaged in anti-competitive conduct in the form of resale price maintenance in contravention of section 26(1) of the Competition Act (CAP 46:09).
After extensive engagement with Trident and further assessment of the complaint, the Competition Authority concluded that whilst the Trident Banner Group model does not strictly comply with the provisions of section 26(1) of the Competition Act, it serves a useful purpose to support the growth of local small independent retailers so that they are able to compete with large corporate retailers. The Authority further recognised that “without the support from Trident, the Banner Group Members would perish because they face competition from retailers from other banner groups.” Accordingly, the Competition Authority has directed Trident to undertake remedial steps in relation to future conduct to ensure strict compliance with the Competition Act. These measures include Trident’s undertaking to increase the awareness of Banner Group Members in relation to their rights and obligations under the banner group arrangement leveraging the monthly members meetings and annual satisfaction survey, and through regular training on competition law.
Trident must also ensure that printed promotional pamphlets for Banner Group Members bear the words “recommended prices” on every page of the pamphlet and to also provide clear written communication to every existing and new Banner Group Member of the flexibility to sell products at any other price besides the minimum recommended price.
For her part the Competition Authority Chief Executive Officer, Ms. Tebelelo Pule lauded the constructive outcome as the best way to restore competition in a sector that serves the vast majority of the rural and marginalised population of the country.