Computicket clipped as Competition Court dismisses appeal

SHOPRITE Holdings subsidiary Computicket was dealt a heavy blow after the Competition Appeal Court dismissed with costs Computicket’s appeal against the ruling that the company was guilty of abuse of dominance.

In a statement issued yesterday, the commission said it welcomed the decision, saying it was satisfied that the Competition Appeal Court dismissed the appeal in its entirety and with costs.

In January, the Competition Tribunal found Computicket guilty of abuse of dominance in contravention of the Competition Act for the period between 2005 and 2010. The company was ordered to pay an administrative penalty of R20 million.

The tribunal found that Computicket’s exclusive agreements with inventory providers had resulted in anti-competitive effects during the period 2005 to 2010. During the proceedings, the commission was able to show that the agreements resulted in the foreclosure of the market to effective competition.

“The tribunal accepted evidence concerning supra-competitive pricing effects, a decrease in supply by inventory providers, a reluctance by Computicket to timeously make use of available advances in technology and innovation as well as a lack of choices for end consumers, all of which cumulatively established the anti-competitive effects of the agreements.

“The tribunal furthermore found that Computicket was unable to demonstrate that its exclusive agreements were justified based on efficiency grounds,” reads the statement.

Smaller operators and consumer groups welcomed the initial fine and said they wanted to see the government going a step further and criminalising the behaviour to prevent further damage to market competitiveness.

In its judgment, the tribunal found that Computicket had “enjoyed a near-monopoly position at the time it introduced the three-year version of the exclusive contracts in 2005” and that “there was a limited market entry” during the period of the contracts it had aggressively enforced. Computicket’s pricing and profits had also increased steadily during the period.

The commission led evidence that Computicket had induced its customers not to deal with competitors and that the quantity and duration of its exclusivity contracts had increased dramatically after its takeover by Shoprite in 2005.

Computicket appealed and the matter was heard by the Competition Appeal Court on June 25. The company’s central argument was that the Tribunal erred in its factual conclusions on exclusion and anticompetitive effects and that the commission’s expert witness, Dr Liberty Mncube, who at the time was the chief economist of the commission, was not independent and therefore his testimony should have been dismissed.

On the independence of the commission’s expert witness who was labelled as biased by virtue of him having been the chief economist of the commission, the Competition Appeal Court rejected that contention.

“The employment of Dr Mncube by the commission has no greater entailments than the appointment of an expert by a litigant. What signifies is whether an expert discharges the duties that bind an expert. Those duties have been specified by this court,” the court said.

The commission was satisfied that the Competition Appeal Court dismissed the appeal in its entirety and with costs.