Weekend Argus (Sunday Edition)

Coffee capsule supplier agrees to collusion fine

- Roy Cokayne

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.

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Coffee capsules

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