SAB competition case: 'no remedy likely to have great impact'

The Competition Tribunal's Norman Manoim. Image: Competition Tribunal

The tribunal found the commission did not present sufficient evidence that the distribution model lessened intrabrand competition between the appointed distributors. It threw out the commission's argument that SAB's distribution model led to unjust discrimination against independent distributors and‚ ultimately‚ the consumer.

It found no evidence that the arrangement with the appointed distributors existed to increase prices‚ normally a hallmark of a collusive arrangement.

"On the contrary‚ the arrangement seems designed to ensure lower prices to outlying areas and to prevent arbitraging by intermediaries to less favourably located customers‚" Norman Manoim‚ the chairman of the tribunal‚ said in his report.

"The arrangement was based on increasing and improving supply to less favourably located customers (in rural areas)‚" he said, adding that an increase in supply was typically the antithesis of a collusive outcome.

Too early to comment

The commission said it was too early to comment. "The commission will carefully study the judgment and determine any further steps afterwards‚" it said.

The case followed a complaint by Eastern Cape wholesaler Big Daddy's in 2004‚ that it was unable to make any profit on the distribution of SAB products as it was not offered the same discounts as the appointed distributors‚ and that it was in fact paying the retail price for beer.

SAB executive chairman Norman Adami welcomed the dismissal of the commission's case.

He said SAB had always believed that all businesses had the right to distribute their products in the manner that best served their needs. SAB distributes 90% of its product through its 40 depots‚ and threatened in the hearings to close down the appointed distributors and distribute through its depots.

Manoim said in the report the likelihood of the threat becoming a reality was "highly probable".

One of the problems with the commission's case was that it focused entirely on the system of appointed distributors‚ which accounted for only 10% of SAB's methods of beer distribution.

"Given this‚ no remedy was likely to have a great impact on the market and‚ even if a remedy was imposed‚ SAB could easily make its distribution system conform to the remaining 90% of distribution‚ which was not under attack from the commission‚" the tribunal found.