Thursday, March 30, 2023

Payless contests Comp Authority’s ruling on Choppies buying group

A day after an unsuccessful bid to preserve a buying group that they have been part of, Payless Supermarket and Woodblock have taken the matter up with the Competition Commission.

The first round of this battle took place on Thursday morning at Cresta Lodge in Gaborone and ended with Payless and Woodblock withdrawing its application but with an understanding that the matter will be reinstated in a short while.

For some time now, the applicants have been part of a three-party buying group in which Choppies Distribution Centre is the main partner.

A buying group is an arrangement through which similar independent businesses come together to leverage their combined purchasing power and in that way receive better pricing and terms on the products they buy.

Up until this year, this was an unregulated business activity but in June, the Competition Authority announced that all companies that all buying groups would have to be exempted in terms of a provision in the Competition Act.

Choppies, Payless and Woodblock applied for this exemption but on Tuesday, the Authority’s Exemptions Review Committee rejected the application.

The Committee summarised its decision in the following way: “This rejection is on the grounds that the facts, analysis and conclusions of the exemption assessment showed that the proposed transaction would likely lead to the lessening of competition that on balance is not proportionate to the benefits for the public and would likely lead to a situation whereby the parties to the transaction would lessen competition in the retailing of Fast Moving Consumer Goods (FMCG) or grocery retailing market where the Parties operate in similar geographic markets.”

The Authority ordered Payless and Woodblock to “wean themselves from the Choppies Buying Group by the 30th November 2014; and provide the Authority with a report of how they have weaned themselves from the Choppies Buying Group by the 15th December 2014.”

The very next day, Payless and Woodblock were knocking at the Competition Commission’s door to protest of the Authority’s decision. The Commission is the governing body of the Authority and adjudicates on matters brought before it.

On Thursday morning, the Commission impaneled a hearing at Cresta Lodge which was chaired by Tendekani Malebeswa in the absence of the substantive chairperson, Dr. Zein Kebonang, who is said to be abroad.

The applicant’s lawyer, Dutch Leburu, began by asking that the matter be postponed to allow compilation of a record that would show what informed the Authority’s decision. The Authority’s lawyer, Jeffrey Bookbinder, counter-argued that Leburu was merely “hedging his bets” as the procedure his clients had adopted didn’t accord with the statutory framework.

In his submission, Leburu had stated the matter was not an appeal because there was no record to use as a frame of reference.
Conversely, Bookbinder insisted that the matter was indeed an appeal and quoted sections of the applicants’ papers in which “appeal” had actually been used.

This assertion was meant to establish context to argue that appeals against the Authority’s decisions go to the High Court and not the Commission.

“If the statute doesn’t allow for appeals to the Commission, then this appeal is misconceived,” Bookbinder told the five-member panel of commissioners.

He also contested the urgency of the application and made two proposals. One – to the Commission – was that it should dismiss the matter with costs and another (to the applicants) was that they should withdraw the matter.

Then followed a ceaseless back and forth between the two lawyers that only bore fruit when Malebeswa suggested an adjournment to allow the two parties to thrash out an agreement.

When the hearing reconvened some minutes later, the Bookbinder read out a consent order (an agreement mutually reached by the people involved in a legal case) which was drafted during the adjournment.

In terms of this order, the applicants shall refer the matter to the Commission and the Authority shall cooperate with such referral.
At a point that the two sides were still slugging it out, Bookbinder had stated that the Authority was not obliged to cooperate with the applicants before the matter was not properly before court.

The Authority also undertook to suspend the decision of its Exemptions Review Committee (which requires Payless and Woodblock wean themselves from the Choppies Buying Group) until the referral process has played itself out. Payless and Woodblock will pay the costs of the matter.

The stakes are very high. The Authority’s decision says that “Payless was reported to have insufficient capital or even credit facilities to purchase its stock in large volumes.”


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