Small firm scores against Rooibos
August 7, 2009
By Florence de Vries
It's a story of the teapot bashing the kettle as small tea maker Coetzee and Coetzee records a vital victory against Rooibos before the Competition Tribunal on charges of abusing powers and shutting out other market players.
The Competition Tribunal yesterday dismissed Rooibos' plea to scrap the case and ruled that the matter should proceed.
The complaint came from competitor Coetzee and Coetzee, which claims it is being shut out of the market because of the exclusive supply agreements Rooibos has with four big tea packers - namely National Brands, Coffee Tea & Chocolate, Unilever and Joekels. They are all respondents in the matter.
If found guilty, Rooibos faces penalties amounting to R15 million for using exclusive agreements with suppliers which, according to the Competition Commission, amount to anti-competitiveness.
The commission referred a complaint to the tribunal in December last year. Rooibos objected to the referral of the case to the tribunal, saying the commission had not identified the anti-competitive effects of the exclusive supply agreements.
Tembinkosi Bonakele, the deputy commissioner of the Competition Commission, said the commission had demonstrated the anti-competitive effects of the exclusive supplier agreements which were preventing competitors from entering the market.
"We have established that Rooibos is a dominant player in the market and that the effects of price discrimination via exclusive supply agreements excludes other players in that market," he said. Bonakele added that the onus was on Rooibos to advance a defence.
Nandi Mokoena, the strategy manager at the commission, said in the Rooibos case the commission had identified anti-competitive behaviour in its preliminary investigation of the group.
"We look at the effects of the conduct on direct customers (such as retailers), the man on the street and competitors in this sector," she said. She added that the commission was not out to protect individual companies, who might simply be ineffectual competitors.
Rooibos argued that the commission did not show how volume discounts offered by Rooibos were anti-competitive.
Rooibos offered volume discounts to players who would be likely to do most of their business with the firm as a result of these incentives. This, however, increased the barriers to entry for smaller players.
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