Local Wholesalers Breaching Competition Act

Competition Authority Wants The Wholesalers To Pay 10 Percent Of Their Turnover


Four wholesale giants that supply local retailers with consumer goods, Metro Sefalana Cash and Carry Limited, Trans Africa (Pty) Ltd, Trident Holdings (Pty) Ltd and Trade World (Pty) Ltd are accused of possible breach of the Competition Act.
The Competition Authority last week dragged the wholesale companies before Competition Commission judges, to answer for charges of possible re-sale price maintenance to their group members.
The Competition Authority which is the applicant in the case indicated that the wholesalers have been dictating prices to their retailers, a development which may have been hindering fair competition in the fast-moving consumer goods market and resulted with consumers paying higher prices.
It has emerged that the Competition Authority conducted a study in the retail and wholesale sector in 2013 and one of the study findings revealed possible re-sale price maintenance by the wholesalers. “The Authority in its investigation found that the wholesalers issued their banner group members with monthly promotional pamphlets that dictate the price. The banner group members were therefore selling the goods at the prices indicated on the pamphlets,” said the authority in the affidavit presented before the Competition Commission. The Competition Authority has indicated that the conduct of the wholesalers cannot be allowed to continue as it hinders fair competition in the fast-moving consumer goods market and contravenes the Competition Act: “The negative impact of retail price maintenance is that it hinders competition in the market and as a result consumer may end up paying higher prices.”
The Competition Authority wants the Competition Commission to order the wholesalers to pay 10 percent of their annual turnover and stay away from anti-competitive practices. “The authority through its applications before the Commission is seeking an order declaring that the Wholesalers have contravened section 26(1) of the Act, an order declaring each wholesaler liable for payment of an administrative penalty equal to 10% of annual turnover in terms of section 43(4) of the Act and an order to the wholesalers to cease and desist from engaging in prohibited practices in contravention of the Act.”
The authority has indicated that in terms of the law a minimum resale price may be set provided that it is made clear that the price is not binding on the seller, the product has the recommended price stated on it and the words “recommended price” are reflected next to the price, something which was never done by the retailers.
Appearing before the panel of Judges led by Dr Onkemetse Tshosa, the lawyer for Trindent Holdings- Jane Cross- neither argued against Competition Authority findings that the wholesaler (Trindent Holdings) has been engaging in uncompetitive practices prohibited by the law nor accepted the charges but indicated that the company is willing to reach an amicable resolution with the Competition Authority. “We have been engaging the competition authority in an attempt to bring the matter to resolution and we want to continue engaging the authority and reach an amicable resolution,” said the lawyer.
Metro Sefalana Cash and Carry Limited also declined to respond to Competition Authority charges. The lawyer representing the wholesale company Osei Ofei said before responding to the charges they need more time to interview around 400 retailers who purchase goods from the wholesaler.
The Competition Commission Judge Dr Tshosa ordered Trindent Holdings, Metro Sefalana and Trans Africa to re-appear before the commission on 5th October 2017 at 9:30 am to respond to the charges, while Trade World was ordered to re-appear on the 4th September 2017 at 11 am.