Competition Commission v Irvin & Johnson Ltd and Another (CR198Oct18) [2020] ZACT 103 (4 September 2020)

Competition Commission v Irvin & Johnson Ltd and Another (CR198Oct18) [2020] ZACT 103 (4 September 2020)

The Tribunal found that the Manufacturing Agreement between Karan Beef (Pty) Ltd and Irvin & Johnson Ltd did not constitute market division in contravention of section 4(1)(b)(ii) of the Competition Act. The evidence showed that Karan had independently decided to exit the market for processed frozen beef products prior to the agreement, and the arrangement was driven by commercial imperatives rather than collusive intent. The agreement was implemented as a vertical manufacturing arrangement, with Karan producing for I&J and ceasing direct supply to retail customers, except for its own factory shops. The subsequent Amending Agreement allowed Karan to supply certain customers directly, but...

Citation
[2020] ZACT 103
Parties
Applicant: Competition Commission; Respondent: Irvin & Johnson Ltd; Respondent: Karan Beef (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
4 September 2020
Case Number
CR198Oct18
Procedural Posture
Competition Enforcement / Final Judgment
Outcome
The complaint referral against Irvin & Johnson Ltd is dismissed.
Judges
Enver Daniels, Yasmin Carrim, Andiswa Ndoni
Legal Topics
Market Allocation, Horizontal Agreements, Section 4 1 B Ii, Manufacturing Agreement, Customer Allocation, Cartel Characterisation
Competition Law Market Allocation Horizontal Agreements Section 4 1 B Ii Manufacturing Agreement Customer Allocation Cartel Characterisation

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Parties

Competition Commission

Applicant

Irvin & Johnson Ltd

Respondent

Karan Beef (Pty) Ltd

Respondent

Procedural Posture

Competition Enforcement / Final Judgment

Legal Issues

  1. 1 Whether the Manufacturing Agreement and Amending Agreement between Karan Beef (Pty) Ltd and Irvin & Johnson Ltd constituted market division in contravention of section 4(1)(b)(ii) of the Competition Act.
  2. 2 Whether the parties were in a horizontal relationship at the time of the agreements.
  3. 3 Whether the conduct amounted to a per se contravention or required further characterisation.

Ratio Decidendi

The Tribunal found that the Manufacturing Agreement between Karan Beef (Pty) Ltd and Irvin & Johnson Ltd did not constitute market division in contravention of section 4(1)(b)(ii) of the Competition Act. The evidence showed that Karan had independently decided to exit the market for processed frozen beef products prior to the agreement, and the arrangement was driven by commercial imperatives rather than collusive intent. The agreement was implemented as a vertical manufacturing arrangement, with Karan producing for I&J and ceasing direct supply to retail customers, except for its own factory shops. The subsequent Amending Agreement allowed Karan to supply certain customers directly, but...

Court Disposition

The complaint referral against Irvin & Johnson Ltd is dismissed.

Orders

  • The Competition Commission’s complaint referral against Irvin & Johnson Ltd (the First Respondent) under case number CR198Oct18 is hereby dismissed.
  • There is no order as to costs.