Weekend Argus (Sunday Edition)
Coffee capsule supplier agrees to collusion fine
A MANUFACTURER and packager of coffee capsules has agreed to pay a R750 000 fine for colluding with a competitor not to undercut each other when selling coffee to grocery retail outlets.
Secret River Trading, a close corporation trading as Cafféluxe, appeared before the Competition Tribunal this week after entering into a consent settlement agreement with the Competition Commission.
Thandi Nkabinde, appearing for the commission, said it had initiated an investigation in July 2015 against Global Coffee Exports and Cafféluxe.
She said Global Coffee had provided Cafféluxe with coffee to be used in the manufacture of coffee capsules.
Cafféluxe had then manufactured and packaged the capsules and sold them back to Global Coffee, she said.
Nkabinde said both Global Coffee and Cafféluxe competed in the market for the supply of coffee capsules to retail customers.
She said the understanding between the parties was that Cafféluxe would package and supply Global Coffee with coffee capsules on condition that Global Coffee did not sell them at prices that were lower than those offered by Cafféluxe.
However, Nkabinde said, in March 2014 Global Coffee had given Checkers a promotional discount on its coffee capsules, which allowed Checkers to sell them at discounted shelf prices that were far below those offered by Cafféluxe.
“Cafféluxe reprimanded Global Coffee for giving the promotional discount and subsequent to this, Global Coffee refrained from giving promotional discounts and it went back to the agreed pricing,” she said.
“This conduct was in contravention of the Competition Act.”
Nkabinde said the fine amounted to 3.2% of Cafféluxe’s annual turnover and 9.9% of the affected turnover in its financial year to February 2014.
She said the contravention had occurred over a period of two years and resulted from a vertical relationship between Cafféluxe and Global Coffee.
“We do know it has stopped (the contravention) because Global Coffee is now manufacturing and selling its own coffee capsules and is now independently determining its prices in the market,” she said.
Nkabinde said that in determining an appropriate penalty, the commission took a number of factors into account, including that Cafféluxe was a first-time offender and a small player in the market.
Kaamilah Thomas, legal representative for Cafféluxe, was unable to explain to the tribunal who was involved in the arrangement that was in contravention of the Competition Act and what action had been taken against these individuals.
Andrei Wessels, the chairperson of the tribunal panel hearing the case, reprimanded Thomas because of the failure of representatives from Cafféluxe to attend the hearing.
“We expect cartelists to be present when they settle agreements like this. In the past they used to show up at least to apologise for what they had done.
“These days they do not show up and we don’t think that is acceptable. We expect your clients to be here in future,” Wessels said.
Cafféluxe still has to supply the commission with a copy of its competition compliance programme. The tribunal has not yet confirmed the settlement agreement.