DURBAN - Shoprite Holdings subsidiary, Computicket, will appeal a R20million fine imposed by the Competition Tribunal for allegedly abusing its market dominance and squeezing smaller firms out of the market over a six-year period.
But small operators and consumer groups, who say the fine is welcome, want to see the government going a step further and criminalising the behaviour to prevent further damage to market competitiveness.
The Competition Tribunal yesterday, after protracted litigation that dragged on for more than 10 years, ordered Computicket (Pty) Ltd to pay a R20million fine after finding the firm guilty of contravening section 8 (d) (i) of the Competition Act by “abusing its dominance” between 2005 and 2010.
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.
The commission alleged that Computicket’s personnel “aggressively enforced” exclusive agreements among its clients, including music promoters and event organisers from at least December 2006 to September 2009, particularly when new entrants emerged in the market.
Computicket denied that its contracts had an exclusionary effect, arguing that customers preferred to use its services and that exclusive contracts mitigated against reputational risk.
The company also argued that there were a number of players that had entered the market and were competing with it during the period in question.
However, 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 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 Competition Commission investigated the case after it received complaints from rivals such as Strictly Tickets CC, Soundalite CC, KZN Entertainment New and Reviews CC, L Square Technologies and Ezimidlalo Technologies CC. Computicket said in a statement yesterday that the firm would lodge a notice of appeal against the tribunal’s decision within 15 days in terms of the Competition Act.
“The penalty calculation is based on the affected Computicket turnover and is limited to live entertainment ticket sales for the specific period,” the company said.
Computicket did not respond to a question about whether it currently had any long-term exclusive agreements in place.
Freeman Bhengu, founder of Ezimidlalo Technologies CC, said he was “very happy” about the fine, although it was “a drop in the ocean” for a big firm, and too late for small businesses that had already closed their doors.
“We had to close because we couldn’t penetrate the market. For guys like us it is too late,” he said.
Bhengu said he would like to see South Africa taking the lead from the US, which had strict laws in place prohibiting uncompetitive practices.
SA National Consumer Union (Sancu) vice-chairperson, Cliff Johnston, said the organisation was “very pleased with the finding and the fine.
“R20million is a significant amount for any organisation to be fined, though the total cost to consumers of this anti-competitive behaviour in the form of inflated ticket prices is likely to be much more than this.
“The message to business is that anti-competitive behaviour will eventually lead to significant consequences,” he said.