Four wholesale companies run the risk of paying 10 percent of their annual turnover as penalty after they were found to have engaged in anti-competitive conduct, contravening section 26 (1) of the Competition Act. The four wholesalers – Trident, Metro Sefalana Cash and Carry, Trans Africa and Trident Holdings – were this week drawn before the Competition Commission for status hearings as they are charged with anti-competitive conduct in the form of resale price maintenance which is contravention of the above Act with their respective banner group members. Their appearance before the competition hearing follows investigations which commenced on the 14th of October 2016 on the conduct of the respondents in contravention of the Act in dealings with their banner group members. The investigations came after the Authority conducted a Competitive Analysis of the Retail and Wholesale Sector Study in 2013 which was skewed towards the four wholesalers. The respondents are involved in the business of supplying various grocery products to individuals and small independent retailers across the country. During its investigations, CA uncovered that the wholesalers do not have any written agreement with their banner group members and that members are not required to pay any joining fees. It was observed that the accused wholesalers and their banner group members held monthly meetings to discuss items to sell on promotion.
The prices of the items to be put on promotion are said to have been unilaterally determined by the respondents, in this case the above named wholesalers. Through their dealings it is alleged that the banner group members were obligated to observe the advertised prices and could not sell below or above the advertised with failure to comply leading to termination of the agreement. The banner group members were also permitted to determine the prices of goods outside the monthly promotion period and the wholesalers would randomly carry out check visits at members’ stores in order to enforce compliance. As a result of the alleged above contraventions, the CA wants the Competition Commission to declare that the respondents have contravened section 26 (1) of the act and further seeks an order for the four wholesalers to cease and desist from engaging in prohibited practices in contravention of the Act. Moreover, the Authority wants an order from the Competition Commission to declare the respondents liable for payment in terms of section 43 (4) of the Act.