On 24 March 2014, the Tribunal dismissed all charges against SAB and its authorised distributors in a matter that has been on-going for 10 years. The ruling by the Tribunal was a landmark decision relating to the relationship between suppliers and their distributors and instances where such a relationship, due to a lack of sufficient independence between the parties, cannot be characterised as the type of conduct, which the legislature intended to prohibit as collusive conduct in terms of s4(1)(b) of the Act. The Tribunal further dismissed charges against SAB and its authorised distributors relating to vertical restrictive practices, resale price maintenance and prohibited price discrimination.
On 14 April 2014 the Commission appealed this decision by the Tribunal to the Competition Appeal Court (CAC) on, amongst other, the following grounds:
- The Tribunal erred in its conclusion that SAB and its authorised distributors could not be understood to be competitors as contemplated in s4(1)(b) of the Act relating to per se prohibited horizontal restrictive practices;
- S4(1) of the Act does not envisage or require an analysis of whether the firms are sufficiently independent to stand in a horizontal relationship and the only defence in this regard is a single economic entity defence in terms of s4(5), which the Tribunal acknowledged was not raised by the respondents and the respondents, in any event, do not satisfy;
- That SAB and its authorised representatives, in fact, are competitors (or at least potential competitors) and the conduct engaged in constitutes market allocation in contravention of s4(1)(b)(ii) of the Act;
- There was sufficient evidence to prove a substantial lessening or prevention of competition in respect of the complaint of vertical restrictive practices in terms of s5(1) of the Act, as the arrangements between SAB and its authorised distributors, amongst other reasons, are harmful to consumer welfare, limit competition between authorised distributors, and the exclusive territories granted in terms of the arrangement between SAB and its authorised distributors provide these authorised distributors with a captive consumer base and an opportunity to charge monopoly prices and to operate inefficiently;
- The transactions between SAB its authorised distributors and independent distributors are equivalent transactions and the Tribunal erred further considering the charge of prohibited price discrimination in contravention of s9(1) of the Act and should have concluded that SAB engaged in price discrimination with reference to its relationship with its authorised distributors and independent distributors;
- For resale price maintenance to be proven, the presence of intention is irrelevant and the Tribunal should have concluded that SAB transgressed s5(2) of the Act by engaging in resale price maintenance, which the Commission argues it did intentionally.
The Commission seeks an administrative penalty against SAB in the total amount of R1,856,320,000 including certain behavioural remedies should its appeal in respect of all the charges against SAB succeed.