The Commission Appeal Court (CAC) has dismissed a case against South African Breweries (SAB) regarding its dual distribution system employed between 2004 and 2007. The appeal followed a decision by the Competition Tribunal to dismiss this long-standing complaint. Details of the Tribunal's decision were included in our March 2014 update (available here). In summary, in dismissing the appeal the CAC found that:
- the relationship between SAB and its appointed distributors (ADs), properly characterised as per the ANSAC decision (a copy of the judgment is available here), was primarily vertical in nature with a horizontal component (SAB depots competing with the ADs). The horizontal component of the relationship was only incidental to and flowed from the vertical supply arrangement. As such, the arrangement should not be considered under section 4 of the Competition Act (Act). The CAC criticised the Tribunal for considering the independence of the ADs as the only relevant factor in its enquiry, but confirmed that it is a relevant consideration;
- there was insufficient evidence to show that SAB's dual distribution arrangement with its ADs substantially lessened or prevented competition in terms of section 5(1) of the Act;
- there was no evidence to show that SAB had imposed sanctions on the reseller ADs for non-compliance with the recommended price as required under section 5(2). ADs had contractual rights to discount; and
- it was unnecessary to consider the unlawful price discrimination arguments (under section 9(1) of the Act) given that the arrangement had not been shown to substantially lessen or prevent competition.
A copy of the CAC's decision is available here.