Cancun Trading No 24 CC and Others and Seven-Eleven Corp SA (Pty) Ltd (18/IR/Dec99) [2000] ZACT 10 (7 April 2000)

Cancun Trading No 24 CC and Others and Seven-Eleven Corp SA (Pty) Ltd (18/IR/Dec99) [2000] ZACT 10 (7 April 2000)

The Tribunal found that the respondent, Seven-Eleven Corporation SA (Pty) Ltd, imposed minimum resale price maintenance on its franchisees by contractually requiring them to sell merchandise only at prices approved by the franchisor. This conduct falls squarely within the per se prohibition of section 5(2) of the Competition Act. The Tribunal rejected the respondent's argument that the franchise operation constitutes a single business entity immune from vertical price-fixing prohibitions, holding that franchise relationships are vertical in nature for competition law purposes. The Tribunal also dismissed the respondent's application for dismissal based on non-joinder, finding no...

Citation
[2000] ZACT 10
Parties
Applicant: Cancun Trading No 24 CC; Applicant: Henlin Trust; Applicant: H & M Lindeque Trust; Applicant: Maltea Trading CC; Applicant: Rietvlei Trading CC; Applicant: Rosa Trading CC; Applicant: Prism Merchandise Enterprises CC; Applicant: Ritima CC; Applicant: Cancum Trading No 26 CC; Applicant: Rogal Trading CC; Applicant: Wahda CC; Applicant: Eloff Anderson Pederson; Applicant: Ruiker Trading CC; Respondent: Seven-Eleven Corporation SA (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
7 April 2000
Case Number
18/IR/Dec99
Procedural Posture
Interim Relief Application / Decision on Application for Interim Relief Under Section 59 of the Competition Act
Outcome
Application for interim relief granted in respect of contravention of section 5(2) of the Competition Act; respondent interdicted from compelling claimants to sell at minimum prices.
Judges
D.H. Lewis, N.M. Manoim, C Qunta
Legal Topics
Vertical Restrictive Practices, Minimum Resale Price Maintenance, Franchise Agreements, Abuse of Dominance, Market Definition
Competition Law Commercial and Corporate Vertical Restrictive Practices Minimum Resale Price Maintenance Franchise Agreements Abuse of Dominance Market Definition

Case Brief

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Parties

Cancun Trading No 24 CC

Applicant

Henlin Trust

Applicant

H & M Lindeque Trust

Applicant

Maltea Trading CC

Applicant

Rietvlei Trading CC

Applicant

Rosa Trading CC

Applicant

Prism Merchandise Enterprises CC

Applicant

Ritima CC

Applicant

Cancum Trading No 26 CC

Applicant

Rogal Trading CC

Applicant

Wahda CC

Applicant

Eloff Anderson Pederson

Applicant

Ruiker Trading CC

Applicant

Seven-Eleven Corporation SA (Pty) Ltd

Respondent

Procedural Posture

Interim Relief Application / Decision on Application for Interim Relief Under Section 59 of the Competition Act

Legal Issues

  1. 1 Whether the respondent's conduct constitutes minimum resale price maintenance prohibited by section 5(2) of the Competition Act.
  2. 2 Whether the respondent's conduct constitutes a restrictive vertical practice under section 5(1) of the Competition Act.
  3. 3 Whether the respondent's conduct amounts to abuse of dominance under section 8(d)(i) and/or 8(c) of the Competition Act.

Ratio Decidendi

The Tribunal found that the respondent, Seven-Eleven Corporation SA (Pty) Ltd, imposed minimum resale price maintenance on its franchisees by contractually requiring them to sell merchandise only at prices approved by the franchisor. This conduct falls squarely within the per se prohibition of section 5(2) of the Competition Act. The Tribunal rejected the respondent's argument that the franchise operation constitutes a single business entity immune from vertical price-fixing prohibitions, holding that franchise relationships are vertical in nature for competition law purposes. The Tribunal also dismissed the respondent's application for dismissal based on non-joinder, finding no...

Court Disposition

Application for interim relief granted in respect of contravention of section 5(2) of the Competition Act; respondent interdicted from compelling claimants to sell at minimum prices.

Orders

  • The respondent is interdicted and restrained from compelling the claimants to sell any merchandise stocked in their Seven-Eleven stores at minimum selling prices determined and fixed by the respondent.
  • This order comes into effect on 7 April 2000 and remains in force until the earlier of the conclusion of the hearing into the prohibited practices alleged by the claimants or six months after the date of issue of this order.