Dark day for Big Daddy’s as it loses SAB ‘monopoly’ case

EASTERN Cape liquor distributor Big Daddy’s has described the Competition Tribunal’s decision to dismiss a complaint against SA Breweries (SAB) as “a dark day”.

This week, the tribunal said there was not enough evidence to prove that SAB’s distribution system stifled competition between companies that distribute SAB-branded beer, such as Castle Lager, Hansa and Black Label. It could not find evidence that prices had risen as a result of the distribution system.

Instead, it said, SAB’s system had actually kept prices low.

Nonetheless, the Competition Commission, which led the evidence at the tribunal, has not ruled out appealing against the ruling.

The decision comes nearly a decade after Big Daddy’s lodged the complaint, claiming that SAB’s deal with its own “appointed distributor” squeezed other suppliers out and led to a hike in beer prices.

SAB distributes 90% of its products through 40 depots and distributors.

Nico Pitsiladi, one of the Big Daddy’s directors who lodged the complaint in 2004, said this week’s ruling was “fundamentally wrong”.

“It is a sad day for the distribution tier in the liquor industry. All the thousands of independent players in the distribution tier will now have no chance to compete with SAB depots and its approved distributors to sell SAB beer to the retail trade.”

The way it worked now, Pitsiladi said, was that SAB’s “approved distributors” sold the beer and other products to other independent liquor distributors at the same price as they sold to the retailers. This made it impossible for independent distributors to compete with SAB depots and their approved distributors.

“The distribution of SAB beer is now monopolised because no one can compete with SAB depots. SAB should only be issued with a producer’s licence. They should not be allowed to produce and distribute SAB beer.”

Thousands of small independent distributors had closed shop, he said.

Pitsiladi said that the trade and industry department should investigate. “If this monopoly is broken in the distribution tier, it will lead to a massive increase of employment in that tier, which SA desperately needs,” he said.

A jubilant Norman Adami, SAB executive chairman, said his group had always been confident that none of its practices broke the rules.