SAB's advocate, David Unterhalter SC, fought back at Metcash CEO Peter Dodson, who also claimed his company's transport network was a "vast improvement" on anything SAB could offer. Unterhalter called an adjournment and then demanded a lengthy list of documents from Metcash to interrogate each of Dodson's claims.
The list included Metcash's financial statements, management accounts, distribution and trading agreements with rivals such as brandhouse, and details of its sales volumes, pricing and margins.
"We have now heard what Mr Dodson has to say. We had not heard any of that because of the paltry nature of (his) witness statement. Naturally there are documents that now need to be sought," Unterhalter said.
He also got in a dig at the Competition Commission, which brought the allegations, including market allocation, price allocation and price fixing, against SAB and which called Dodson as a witness. "It's doubly rich coming from the commission, who has assailed us for months with discovery requests, saying every document in the SAB warehouse is relevant," Unterhalter said.
The fourth day of the hearing was halted at lunchtime so SAB's legal team could formally list the documents it would request. Commission advocate Anthony Gotz said the brewer would have to justify its request for each document, a process that will only start tomorrow and is likely to push the hearing beyond its scheduled end next Friday.
Giving evidence yesterday morning, Dodson said his company, which distributes and retails beer nationally, was disadvantaged when competing with SAB's 13 "appointed distributors". The profit margin on SAB's 750ml quart bottles - which made up 70% of Metcash's business with SAB - was less than 2%, and insufficient to cover distribution costs, he said.
"It doesn't take rocket scientists. You cannot deliver goods on less than a 2% margin.
"What we've had to do is get a great amount of distribution income from (SAB's) competitors. (SAB) has had a free ride on all goods distributed on these trucks."
While SAB had traditionally given a 3% discount for up-front internet payments on cans and small bottles, it had only started giving discount on quarts about three months ago, Dodson said, accusing SAB of only doing so as a result of the commission's probe into the company. Even so, other suppliers were more generous, he said.
"The discounts we get from SAB range from 3%-6%. The discounts from competitors are more than double that."
Dodson argued that SAB's appointed distributors, with whom his business competes in places such as Ermelo in Mpumalanga and George in the Western Cape, were advantaged on price, "whether it be through discounts, handling fee or a distribution fee - whatever they wish to call it".
He was asked if his prices would come down if he got a better discount.
"Probably they would allow me to make less of a loss on the distribution of quart beers of SAB and would put less of a strain on their competitors through my organisation," Dodson replied.
He also said his liquor business had grown "extraordinarily" after SAB lost the licence to sell Amstel in SA, which he attributed in part to brandhouse's aggressive sales work.
As the tribunal drama played out, SAB MD Norman Adami, scheduled to appear next week, told an audience at the University of Stellenbosch that Amstel- and Heineken-producer brandhouse "deliberately tried to mislead South African retailers" by asking them to reduce their margin on 660ml bottles of Amstel.
Heineken-Diageo-Namibian Breweries joint venture brandhouse says retailers can increase their sales volumes and overall profit by selling the 660ml bottle for R10, less than the 750ml bottle the beer previously came in.
Since brandhouse started producing Amstel locally in returnable bottles, it has been targeting drinkers of SAB's Castle Lite brand as well as Carling Black Label drinkers, who are attracted to a cheap premium alternative.
Back in Pretoria, the interaction between the men sparring in the tribunal chamber took on a barbed tone as the advocate asked for documents spanning years of Metcash's history. "Given that this is a firm undergoing some restructuring in the light of financial difficulties, we would like to see its strategy documents relating to future plans and given to creditor banks," Unterhalter said.
Dodson, who in June announced a turnaround plan for the company that was saddled with a large debt when it was taken private in 2004, responded with barely disguised annoyance.
Source: Business Day
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