Proposed settlement agreement in potato case
THE Competition Tribunal is today expected to hear a proposed settlement agreement between a Netherlands-based seed potato breeder, its exclusive South African distributor and the Competition Commission.
The commission had referred HZPC Holland and Wesgrow Potatoes to the tribunal in 2017 for alleged anti-competitive conduct in relation to the exclusive supply of the Mondial seed potato varietal in South Africa.
The tribunal said the proposed settlement agreement would finalise the matter. “The two companies do not admit to infringing the Competition Act and no administrative penalty is proposed. However, the companies do provide several undertakings,” the tribunal said.
HZPC is an international seed potato breeder, and through research and development, it breeds and markets original seed potato varieties across the world, including the Mondial seed potato varietal. In countries where it does not have a branch, it enters into licence agreements to supply local markets.
In South Africa, it entered into
The two companies do not admit to infringing the Competition Act and no administrative penalty is proposed Competition Tribunal
agreements with Wesgrow, a local seed potato grower which also exports to other African countries.
Wesgrow has had exclusive agreements with HZPC to sell the Mondial seed potato varietal to commercial farmers who grow the potatoes for sale to consumers as table potatoes, the tribunal said.
When a new potato variety is created, a breeder is afforded exclusive rights over it for 20 years in terms of the Plant Breeder’s Rights Act 15 of 1976.
This is a type of intellectual property right enabling breeders to recoup research and development costs, as breeding a particular seed potato variety can take over a decade and requires significant financial investment.
The commission alleged that: “Wesgrow unlawfully refused access to other seed potato growers to the Mondial potato varietal after expiry of the plant breeder’s right on October 11, 2013.
“This was done through an agreement between HZPC and Wesgrow, still effective for the period after October 11, 2013 to date, and further through agreements that Wesgrow concluded with its customers, effective for the period October 11, 2013 to date.”
The tribunal said the companies had made several undertakings which sought to address contractual conditions Wesgrow had concluded with customers, which sought to regulate how they could utilise the Mondial seed potatoes.
These included that for three years Wesgrow would supply plantlets to professional seed growers, seed banks, labs and tissue culture facilities at cost, which included reasonable import and transport costs and handling fees for the preservation and care of such material, and that Wesgrow would not prohibit its customers from planting farm-saved seed of the Mondial seed potato varietal.