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South Africa Order

Competition Tribunal

Vexall Proprietary Limited v Business Connexion Proprietary Limited and Another (IR119Oct19) [2020] ZACT 85 (12 February 2020)

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Source document

01

Holding and result

The Tribunal found that BCX's practice of selling Unisolv licences on condition that customers also purchase value-added services constituted a prima facie tying arrangement and potential abuse of dominance under the Competition Act. The applicant demonstrated imminent harm to competition and customers if the conduct continued. The Tribunal was satisfied that the requirements for interim relief under section 49C were met and accordingly prohibited BCX from imposing such conditions for a period of six months or until the complaint hearing is concluded, whichever occurs first. Costs were awarded to the applicant.

Court disposition

Interim relief granted prohibiting BCX from tying the sale of Unisolv licences to value-added services; costs awarded to applicant.

Orders

  • BCX is prohibited from selling or offering a Unisolv licence on condition that a customer purchases value-added services from BCX.
  • This prohibition remains in force for six months from the date of the order or until the conclusion of a hearing into the complaint, whichever is earlier.
  • BCX must pay the applicant's costs of the application.

02

Material facts

Parties

Vexall Proprietary Limited

Applicant

Business Connexion Proprietary Limited

Respondent

Competition Commission

Respondent

03

Procedural history

  1. Posture

    Urgent Application / Order Issued After Hearing

04

Questions and positions

Legal issues

Party arguments

Applicant
The applicant argued that BCX, as the supplier of Unisolv licences, unlawfully required customers to purchase value-added services as a condition for obtaining the licence. This conduct constituted an abuse of dominance and anti-competitive tying, warranting urgent interim relief to prevent further harm to competition and customers. The applicant sought an order prohibiting BCX from continuing this practice and requested costs.
Respondent
BCX contended that its conduct did not amount to unlawful tying and that the provision of value-added services was not a mandatory condition for the sale of Unisolv licences. BCX argued that interim relief was unwarranted as there was no imminent harm or abuse of dominance. The Competition Commission supported the respondent's position and opposed the granting of interim relief.

05

Court’s reasoning

  1. 01

    Competition Act 89 of 1998, section 49C

    Interim relief may be granted under section 49C of the Competition Act where there is prima facie evidence of prohibited conduct and imminent harm to competition.

  2. 02

    Competition Act 89 of 1998

    Tying arrangements by a dominant firm may constitute an abuse of dominance if they restrict competition or coerce customers into purchasing unwanted products or services.

  3. 03

    Competition Tribunal Rules

    Costs may be awarded to the successful applicant in interim relief proceedings before the Tribunal.

06

Ratio, limits and disposition

Ratio decidendi

The Tribunal found that BCX's practice of selling Unisolv licences on condition that customers also purchase value-added services constituted a prima facie tying arrangement and potential abuse of dominance under the Competition Act. The applicant demonstrated imminent harm to competition and customers if the conduct continued. The Tribunal was satisfied that the requirements for interim relief under section 49C were met and accordingly prohibited BCX from imposing such conditions for a period of six months or until the complaint hearing is concluded, whichever occurs first. Costs were awarded to the applicant.

Obiter and limits

  • The Tribunal noted that interim relief is a temporary measure and does not constitute a final determination of the merits of the complaint.
  • The order is intended to preserve the status quo and prevent further harm pending the outcome of the main complaint proceedings.

Court disposition

Interim relief granted prohibiting BCX from tying the sale of Unisolv licences to value-added services; costs awarded to applicant.

  • BCX is prohibited from selling or offering a Unisolv licence on condition that a customer purchases value-added services from BCX.
  • This prohibition remains in force for six months from the date of the order or until the conclusion of a hearing into the complaint, whichever is earlier.
  • BCX must pay the applicant's costs of the application.

Source and reliance status

Competition Tribunal

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Judgment reading view

Judgment text

The complete available source text.

Source document

Competition Tribunal

Order

[2020] ZACT 85

COMPETITION

TRIBUNAL OF SOUTH AFRICA

Case No: IR119Oct19

In the matter between:

VEXALL

PROPRIETARY LIMITED Applicant

And

BUSINESS CONNEXION PROPRIETARY LIMITED First

Respondent

THE COMPETITION COMMISSION Second

Respondent

Panel: Yasmin Carrim (Presiding Member), Anton Roskam (Tribunal Member),Halton Cheadle (Tribunal Member)

Heard on: 3 February 2020

Order issued on: 12 February 2020

ORDER

KINDLY TAKE NOTICE THAT having heard the parties, the Competition Tribunal issues the following order in terms of section 49C of the Competition Act 89 of 1998, as amended ("the Act") in the following terms:

1. For the purposes of this order the following terms mean-

a. 'BCX' means the First Respondent;

b. 'complaint' means the complaint referred to the Competition Commission by the Applicant on 16 October 2019;

c. 'customer' means a customer of the Unisolv licence supplied by BCX;

d. 'Unisolv licence' means the use of the Unisolv software and any upgrades, bug fixes, repairs or additional coding to the software;

e. 'software support services' means those support services related to the upgrading and repairing of the Unisolv software provided by BCX;

f. 'value added services' includes BCX's Data Bureau Service, its Electronic Remittance Services and support services other than software support services.

2. From the date of this order BCX is prohibited from selling or offering a Unisolv license on condition that a customer purchases value-added services from BCX.

3. The order in paragraph 2 remains in force for 6 months from date of this order or the conclusion of a hearing into the complaint, whichever is the earlier.

4. BCX to pay Applicant's costs of the application.

Ms Yasmin Carrim

Mr Anton Roskam and Prof. Halton Cheadle concurring.

Date: 12 February 2020

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Authorities

Authorities used by the court

Cases, legislation, regulations, and constitutional provisions identified in the available record.

Competition Act 89 of 1998

Legislation

Legislation referenced in the available case record.

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