SAFLII Note: Certain personal/private details of parties or witnesses have been
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competitiontribunal
COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: CR210Mar14/SA156Nov16
In the matter between:
The Competition Commission Applicant And
Premium Brand Distributors (Pty) Ltd Respondent
Panel : M Mazwai (Presiding Member)
A Ndoni(Tribunal Member)
I Valodia (Tribunal Member)
Heard on : 07 December 2016
Decided on : 07 December 2016
Settlement Agreement
The Tribunal hereby confirms the settlement agreement as agreed to by the Competition
Commission and Premium Brand Distributors (Pty) Ltd annexed hereto marked "A".
07 December 2016
Date
___________________
Presiding Member
Ms Mondo Mazwai
Concurring: Ms Andiswa Ndoni and Prof. lmraan Valodia
IN THE COMPETITIONTRIBUNAL OF SOUTH AFRICA
(HELD IN PRETORIA)
CT Case No.018663
CC Case No.2011AUG0189
In the matter between
COMPETITION COMMISSION Applicant
and
PREMIUM BRANO DISTRIBUTORS (PTV) LTD
Respondent
SETTLEMENT AGREEMENT BETWEEN THE COMPETIT ON COMMISSION AND
PREMIUM BRAND DISTRIBUTORS (PTY) LTD IN RESPECT OF AN ALLEGED
CONTRAVENTION OF SECTION 6(2) OFTHE COMPET TION ACT N0.89 OF1998, AS
AMENDED.
Preamble
The Competition Commission ("the Commission") and Premium Brand Distributors (Pty) Ltd
("Premium Brand") hereby agree that application be made to the Competition Tribunal ("the
Tribunal") for the confirmation of this Settlement Agreement as an order of the Tribunal in
terms of section 27(1)(d) read with section 59(1)(a) of the Competition Act (Act No.89 of
1998), as amended, ("the Act”) in respect of an alleged contravention of section 5(2) of the
Act on the terms set out below:
1. DEFINITIONS
For the purposes of this Settlement Agreement the following definitions shall apply:
1.1 ."Act'' means the Competition Act No. 89 of 1998, as amended;
1.2. “Commission” means the Competition Commission of South Africa, a
statutory body established in terms of section 19 of the Act, with its principal place of
business at 1st Floor, Mulayo Building (Block C), the DTI Campus, 77 Meintjies Street,
Sunnyside, Pretoria, Gauteng;
1.3. "Commissioner'' means the Commissioner of the Competition Commission,
appointed in terms of section 22 of the Act;
1.4. "Complaint” means the complaint lodged by Gasp Colour Imaging (Pty) Ltd in
terms of section 498(2) of the Act under case number 2011Aug0189;
1.5. "Gasp Colour'' means Gasp Colour Imaging (Pty) Ltd. a company duly
incorporated in terms of the laws of South Africa with its principal place of business at
Unit 1A, 16-24 Queenspark Studio, Queenspark Avenue, Salt River, Cape Town;
1.6. ”Settlement Agreement'' means this agreement duly signed and concluded
between the Commission and Premium Brand Distributors (Pty) Ltd;
1.7. "Nikon Corporation" a company based in Japan that manufactures, sells
and exports photographic equipment;
1.8. "Nikon Products" means Nikon branded photographic equipment. in
particular, cameras, lenses, flashes etc;
1.9. “Parties” means the Commission and Premium Brand Distributors (Pty) Ltd;
1.10. “Premium Brand Distributors" or "Premium Brand” means Premium
Brand Distributors (Pty) Ltd, a company duly incorporated with limited liabilty in
accordance with the laws of South Africa with its principal place of business at Kyalami
Buslness Park, 131 Kyalami Boulevard, Midrand, Johannesburg; and
1.11. "Tribunal" means the Competition Tribunal of South Africa, a statutory body
established in terms of section 26 of the Act, with its principal place of business at 3rd
Floor, Mulayo building (Block C), the DTI Campus, 77 Mentjies Street, Sunnyside
Pretoria, Gauteng.
2.. BACKGROUND
2.1. On 10 August 2011, the Commission received a complaint against Premium Brand
(formerly registered as Foto Distributors (Pty) Ltd) from Gasp Colour. In its complaint,
Gasp Colour alleged, amongst other things, that Premium Brand, a sole authorised
distributor of Nikon branded products In South Africa, prohibits its network of retailers
from selling Nikon branded photographic equipment at any price below its wholesale
list price plus a mark-up of not less than 5%.
2.2. Premium Brand is an importer and distributor of photographic equipment or
imaging products such as reflex and compact cameras, binoculars, lenses, and flashes
in South Africa. Premium Brand has been granted an exclusive licence by the Nikon
Corporation, based In Japan, to distribute its products in South Africa, Lesotho and
Swaziland. Nikon manufactures optical Instruments ranging from imaging products
such as cameras and camcorders to sport optics such as binoculars and telescopes as
well as precision equipment such as Integrated circuit steppers and scanners.
Premium Brand distributes brands such as Lexar Memory, Gitzo Tripods, Nikon
Software and Nikon photographic equipment.
2.3. In terms of the distribution arrangement between Nikon and Premium Brand,
Nikon sells its products to Premium Brand Distributors for distribution, inter alia, in
South Africa. In tum, Premium Brand Distributors sells the Nikon products to Its retailer
network in terms of trading agreements concluded with retailers. Retailers then on-sell
the Nikon products to their customers who, in the main, comprise of professional and
non professional photographers. In terms of the trading agreements concluded
between Premium Brand Distributors and Its retailer network, retailers undertake to
exclusively purchase the Nikon products from Premium Brand Distributors. Retailers
are not precluded from selling competing products in their retail outlets. Premium
Brand Distributors supplies the Nikon products to large chain store retailers such as
Makro, Game, and Hi-fi Corporations: specialist retailers such as ORMS, SA Camera
and Camera World; and buying groups such as New Heights, Iser Group and Group
Appliances.
3. COMMISSION'S INVESTIGATION AND FINDINGS
3.1. The Commission conducted an Investigation into Premium Brand Distributors'
alleged conduct and found the following:
3.1.1. The relationship between Premium Brand Distributors and its retailers
is a vertical relationship;
3.1.2. Premium Brand Distributors does not sell Nikon products directly
to end customers and therefore does not compete with its retailers.
3.1.3. The nature of Premium Brand Distributors' conduct took the form of co-
ordinating the advertised prices of its network of retailers.
3.1.4. Premium Brand's conduct spanned a period of four years, from 2006 to
2012.
3.2. On 28 March 2014, the Commission referred the complaint against Premium
Brand to the Tribunal under Tribunal case number CT: 018663.
3.3. Following a prehearing on 27 June 2016, the Commission and Premium Brand
engaged in settlement discussions in order to avoid further protracted litigation in this
matter.
4. ADMISSION
Premium Brand admits that it co-ordinated the advertisement of the Nikon Brand by, inter
alia, co-ordinating the prices at which the Nikon brand was advertised in a manner which may
have had the effect of contravening section 5(2) of the Act.
5. AGREEMENT CONCERNING PREMIUM BRAND DISTRIBUTOR'S FUTURE CONDUCT
Premium Brand Distributors agrees and undertakes:
5.1. Not to engage in resale price maintenance in contravention of section 5(2) of the
Act;
5.2. To develop and circulate a policy document to all its distributors Informing them
that all recommended retail prices in relation to Nikon products are recommendation
only and all distributors are at all times free to determine their own retail prices;
5.3. Develop, implement and monitor a competition law compliance programme
incorporating corporate governance designed to ensure that its employees,
management, directors and agents do not engage in future contraventions of the Act.
In particular, such compliance programme will include a mechanism for the monitoring
and detection of any contravention of the Act;
5.4. To submit a copy of such compliance programme to the Commission within 60
days of
the date of confirmation of the Consent Agreement as an order by the Tribunal; and
5.5. To prepare and circulate a statement summarising the contents of this Settlement
Agreement to all management and operational staff employed at Premium Brand
distributors within 60 days from the date of confirmation of this Settlement Agreement
by the Tribunal.
6. ADMINISTRATIVE PENALTY
6.1. Having regard to the provisions of sections 58(1)(a)(iii) read with sections 59(1)
(a), 59(2) and 59(3) of the Act, the parties have agreed that Premium Brand will pay an
administrative penalty in the amount of R300 500.00 (Three Hundred Thousand and
Five Hundred Rand, only). This amount does not exceed 10% of Premium Brand's
annual turnover in the Republic for Its financial year ended 30 June 2016.
6.2. Premium Brand Distributors will pay the amount set out in paragraph 6.1 above to
the Commission within 3 (three) months from the date of confirmation of this
Settlement Agreement by the Tribunal.
6.3. The penalty must be paid into the Commission's bank account which is as follows:
NAME:THE COMPETITION COMMISSION FEE ACCOUNT
BANK: ABSA BANK, PRETORIA
ACCOUNT NUMBER: [4...]
BRANCH CODE: 323 345
PAYMENT REF:2011AUG0189 -Premium Brand
6.4. The penalty will be paid over by the Commission to the National Revenue Fund in
accordance with the provisions of section 59(4) of the Act.
7. FULL AND FINAL SETTLEMENT
This Settlement Agreement, upon confirmation as an order by the Tribunal, is entered into in
full and final settlement and concludes all proceedings between the Commission and
Premium Brand relating to the alleged contravention of section 5(2) the Act that was the
subject of the Commission's investigation under Commission Case No. 2011AUG0189.
Dated and signed at PRETORIA on the 20 TH day of OCTOBER 2016
For Premium Brand Distributors (Pty) Ltd
________________________
Duly authorised representative of
PREMIUM BRAND DISTRIBUTORS (PTY) LTD
Full Names S TEFAN VAN DER WALT
Dated and signed at PRETORIA on the 3 RD day of NOVEMBER 2016
For the Competition Commission
_______________________
TEMBINKOSI BONAKELE
COMMISSIONER