Thursday, June 20, 2024

Competition Authority report accuses Choppies & Payless of “sinister” motives

A law firm commissioned to provide legal advice by the Competition Authority has recommended that Choppies Superstore and Payless be prosecuted for possible price fixing that would have contravened the competition laws.The two had been given an exemption as a buying group in 2014 by the Authority.In their thick multi-paged opinion, Peo Legal observed that there is also a possibility of market division by Choppies and Payless.According to Peo Legal, this is so because if Choppies and Payless agree on the prices at which they will purchase their FMCG, and also agree on the parties that will supply those products, they effectively agree to divide the market viz suppliers, in accordance with section 25(b) of the Competition Act.

“On a conspectus of all the evidence, it appears to us that an investigation into the conduct of Choppies and Payless is indeed warranted. On the face of it, the various buying group agreements may have been collusive, and Choppies and payless may, for all intents and purposes have merged their operations without the approval of the Authority. The evidence has revealed that the parties’ motives are sinister.” The Report advises the Competition Authority to co-operate with the South African Commission in prosecuting Choppies and Payless in Botswana.“the two authorities may also find it useful to cooperate in investigating other retail buying agreements in which Choppies and Payless are involved (if any) both in Botswana and South Africa. The authorities might also consider co-operating in investigating buying group agreements in general – i.e. over and above those in which Choppies and Payless are involved.”In the legal assessment even the Competition Authority does not escape scot free.The legal opinion says the Competition Authority should have investigated the merging parties’ failure to notify the Malique-Payless merger. This, says the opinion was a legal obligation on the part of the competition Authority.

“It is likely that the Authority failed to fulfill its statutory mandate by not pursuing the merging parties. The Authority should conduct an internal investigation into this failure and the reasons therefor.”Further the legal opinion finds that the then Commission Board Chairman Dr [Zein] Kebonang appears to have stood to benefit from the Malique-Payless merger, and the Authority was aware of the ‘corruptions” relating to this merger.“Needless to say, an investigation into this matter – internal and/or internal – should be undertaken.”The lawyers further take a swipe at a decision by the Competition Authority to settle with the merging parties.  And also, on “baseless grounds” later went back on its decision to reject the 2014 Exemption Certificate. “The conduct cannot be justified under any provision of the Competition Act, as far as we are aware. As such, the Authority might have acted outside the bounds of its mandate and powers. Not only that the, the Authority might well have “contravened” sections of the Competition Act that oblige it to uncover and prosecute anti-competitive conduct, such as, for instance, section 35(1) of the Competition Act.”The report singles out Dr Kebonang by name for investigation.

While an exemption was given in 2014 for Choppies and Payless to operate as a buying group, another application by the two was in 2017 rejected.  This says the report was “late-in-coming” but correct.In rejecting the exemption, “the Authority found that the submissions that Choppies and Payless had made in the Joint Confirmation were misleading. Knowingly providing misleading information to the Authority is an offence. It is open to the Authority to initiate complaint against the parties, which complaint we are able to assist with.”

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