The Competition Commission's (Commission's) long-running complaint of anticompetitive behaviour against tea processor Rooibos Ltd (Rooibos), reached finality this week. The Competition Tribunal (Tribunal) confirmed, as an order, a consent agreement between the Commission and Rooibos, representing full and final settlement of the matter.
Following a complaint received from a market participant in July 2015, the Commission launched an investigation into Rooibos' allegedly engaging in exclusionary behaviour by:
- concluding long-term supply agreements with various tea farmers (between 2014 and 2018) in terms of which the farmers undertook to supply Rooibos with up to 50% of their tea production to the exclusion of rival tea processors; and
- using its production research to induce farmers to commit stipulated amounts of rooibos tea to gain access to the research.
The Commission was of the view that Rooibos was dominant in respect of a unique product grown in a small geographic region, and that the conduct locked-in significant produce from farmers and significantly foreclosed rival tea processors from access to the volume of tea produce they needed for bulk processing of rooibos tea, thereby hampering their expansion in the market.
Without conceding liability, Rooibos has undertaken to the Commission in the consent agreement, inter alia, that:
- its long-term supply agreements with tea producers will not exceed a duration of five years;
- it will avoid imposing restrictions on tea farmers in respect of dealing with rival tea processors; and
- it will publish, on its website, the results of completed production research that it contracts or commissions within five days of receiving the results, without any conditions or restrictions to access. The type of research, relating to the production and harvesting of rooibos could include clinical trials and studies, but specifically excludes business and trade secrets, and own research, technical experience and advice.
No administrative penalty was payable.
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