E-Malt.com News article: South Africa: SAB’s domination of beer distribution in the country leaves few chances to other companies

Nico Pitsiladi, the director of Big Daddy’s Group, which was the original complainant in the Competition Commission’s case against South African Breweries (SAB), said it was “extremely important” that SAB’s stranglehold on the distribution tier “be removed”, Business Report communicated on April, 4.

Pitsiladi said that while SAB was allowed to dominate the distribution of beer, it would be very difficult for other companies to compete.

Pitsiladi was commenting on the first day of the Competition Tribunal’s hearing into SAB’s application to have the commission’s case against it dismissed.

SAB’s lawyers are arguing that the case before the tribunal must be dismissed because the commission is arguing a different case from the one that was originally brought by Pitsiladi. This legal argument, which is highly technical, has been given legs by a number of seemingly contradictory rulings that have been made by the Competition Appeal Court and the Supreme Court of Appeal. Most recently it involved a controversial ruling by the Supreme Court of Appeal in regard to the Netstar case.

Pitsiladi said that SAB was making a desperate bid to have the case against it withdrawn because it realised how much it stood to lose if the case went against it. The charges facing SAB, which controls 89 percent of the South African beer market, were originally lodged with the commission by Pitsiladi in November 2004. The commission investigated the charges and in 2007 decided to refer a case to the tribunal.

The original complaint involved allegations relating to prohibitive practices as well as allegations that SAB had abused its dominant position by engaging in practices that required or induced retail outlets not to deal with SAB’s beer-manufacturing competitors.

However, SAB objected to the commission combining the prohibitive practice allegations with the abuse of dominance allegations, and in May last year the tribunal agreed that the two sets of allegations would be heard separately.

The current hearings, which are scheduled to run until April 15 and resume in May, relate to allegations of prohibitive practices. The commission is alleging that SAB engaged in minimum resale price maintenance (price fixing) in contravention of section 5(2) of the Competition Act.

It is also alleging that SAB is guilty of price discrimination in contravention of section 9 of the same act.

Pitsiladi has argued that it was impossible for him to compete with SAB’s appointed distributors because they benefited from attractive discounts that were not available to him.

It also emerged on April, 4 that the commission has indicated that it wanted the case against SAB put on hold until SAB decided whether or not it would appeal the tribunal’s ruling on the dismissal application.


06 April, 2011