South Africa: Competition Tribunal Dismisses Cigarette Maker's Complaint

Source from:  Business Day 06/30/2009

Johannesburg - THE application to impose a fine on British American Tobacco SA (Batsa) for allegedly abusing market dominance had been dismissed, the Competition Tribunal said yesterday. Japan Tobacco International (JTI) lodged a complaint with the Competition Commission in October 2003. It alleged that Batsa, a wholly owned subsidiary of British American Tobacco, was an "overwhelmingly dominant manufacturer of cigarettes in SA" and involved in conduct aimed at excluding its competitors (including JTI) from access to retail channels. The Japanese cigarette manufacturer accused Batsa of violating competition laws by negotiating agreements for the promotional display of its products at the point of sale. It also complained about the incentive programmes Batsa had offered to retailers, believing this was to the detriment of competitors. Batsa denied it had monopoly power and said its programmes and agreements were not aimed at foreclosure of their competitors and had not had that effect. The tribunal found if manufacturers "of the size and with the brand portfolios of JTI (were) to make a determined effort to penetrate this market", there would be sufficient access to promotional opportunities. JTI appeared to want a "free ride". "We think that JTI should compete for its market share, rather than have us order the elimination of critical platforms of competition." Unrivalled dominance was "not prohibited or even punishable under the provisions of the Competition Act", the tribunal said. Enditem