Home » News » Business » New wholesale price trick headache hit Competition Authority

New wholesale price trick headache hit Competition Authority

Publishing Date : 13 January, 2020

Author : TSAONE SEGAETSHO

It is apparent that the anti-trust body, Competition Authority (CA), dealt with a first of its kind issue in the local antitrust organs altogether in this current period; where wholesalers were caught with the conduct of resale price maintenance (vertical agreements).


According to competition laws, resale price maintenance is an agreement between a wholesaler and a retailer not to sell a commodity or product below a specified price. “Compared to the previous year where no cases were prosecuted, there have been four cases of resale price maintenance and exclusive dealing that were brought before the Commission,” said Tebelelo Pule CEO and Secretary to the Competition Commission.


So loud is the concern of resale price maintenance that CA Chairperson Onkemetse Tshosa, in the latest annual report echoed Pule’s grave concerns, saying the number of cases relating to the conduct of resale price maintenance is heartening. According to the Competition Authority, in its 2018/19 annual report, the antitrust body had in 2017 had four cases of resale price maintenance. According to the authority, the referred cases were against four (4) wholesalers namely; Metro Sefalana Cash and Carry Limited, Trident Holdings (Pty) Ltd, Trans Africa (Pty) Ltd and Trade World (Pty) Ltd.


While acknowledging that this was the first time that such a conduct was investigated by the authority, Tshosa said the implication of such a feat is that businesses are increasingly becoming aware of the offence of resale price maintenance and, most importantly, prosecutors, investigators and the Commission have broadened the horizons of competition law practice in Botswana, particularly in relation to resale price maintenance.


The resale price maintenance case was referred to the Competition Commission led by Tshosa in August 2017, and it was last year successfully “finalized” with court settlement agreements according to the CA annual report. CA says all the four wholesalers caught with resale price maintenance are currently in compliance with the agreed conditions.


An example of resale price maintenance


A classic case of resale price maintenance investigated by CA in the current period is the one where the authority engaged the Trident Banner Group, following concerns that through the use of monthly promotion pamphlets, Trident engaged in anti-competitive conduct in the form of resale price maintenance in contravention of section 26(1) of the Competition Act (CAP 46:09).


“The authority carried out a number of competition analyses involving Trident Wholesalers. An important tool of the Banner Group model involves the use of monthly promotions in which Trident and Banner Group members jointly advertise promotional products in promotional pamphlets produced by Trident at a nominal cost to the members.


Trident acts as a wholesaler of grocery products and general merchandise to independent retailers throughout Botswana. It operates Banner Groups under the trade brand names Big 11, Fair Price and Saverite, in which Banner Group members participate on a voluntary basis in monthly promotional activities undertaken under each Banner Group.


In addition to the extensive trade and retail support that Trident offers to about 500 independent retailers on its Banner Group member base, it has been able to offer highly competitive prices to these local retailers throughout Botswana by means of group purchasing power and supply chain management,” says CA in its assessment which was cited as an example of resale price maintenance in the 2018/2019 annual report.


CA had an extensive engagement with Trident and further assessment of the complaint, the authority concluded that whilst the Trident Banner Group model does not strictly comply with the provisions of section 26(1) of the Competition Act, it serves a useful purpose to support the growth of local small independent retailers so that they are able to compete with large corporate retailers. According to CA the support from Trident, the Banner Group Members would perish because they face competition from retailers from other banner groups.


The authority directed Trident to undertake remedial steps in relation to future conduct, this is to ensure strict compliance with the Competition Act. Measures include Trident’s undertaking increase the awareness of Banner Group Members in relation to their rights and obligations under the banner group arrangement leveraging the monthly members meetings and annual satisfaction survey, and through regular training on competition law.


Another measure for Trident is to ensure that printed promotional pamphlets for Banner Group members bear the words “recommended price” on every page of the pamphlet. The other measure is for Trident to provide a clear written communication to every existing and new Banner Group Member of the flexibility to sell products at any other price besides the minimum recommended price.


Trident is also expected to ensure that there is no perceived or actual threat of expulsion from the Banner Group, or termination of the agreement where a Banner Group Member chooses to sell at any price other than the recommended price. Also, Trident should introduce regular and increased levels of communication to both Banner Group Members and customers, informing them of the Trident banner group promotions of select products/ commodities at recommended discounted prices.


According to CA Trident should also “Formalize Banner Group Member engagement through a structured programme including but not limited to initiatives that provide training, merchandising, marketing and store support. In order to enhance understanding and promote compliance, the Authority subsequently made presentations to Trident Banner Groups in Gaborone, Mahalapye, Palapye, Selebi-Phikwe, Francistown and Maun in the month of July 2018.”

Cartoon

Polls

Do you think the courts will help put the UDC, BMD impasse within reasonable time ahead of the 2019 General Election?

banner_14.jpg
banner_12.jpg

POPULER BRANDS