Tribunal fines Uniplate R16m for abuse of dominance
The Competition Tribunal has found that the largest manufacturer and distributor of number plate blanks and embossing machines in South Africa, Uniplate Group (Pty) Ltd abused its dominance between 2010-2014 and has ordered it to pay an administrative penalty of R16 192 315 (sixteen million one hundred and ninety-two thousand three hundred and fifteen rand).
Embossing machines and number plate blanks are used together to produce the final number plate which is affixed to vehicles.
Uniplate had been using long term exclusive agreements to contractually oblige its customers, who do the actual embossing of number plates, when purchasing a Uniplate embossing machine to also purchase all of their number plate blanks and embossing materials from Uniplate. The exclusive supply agreements tied up customers for a period of 10 years and prevented the customer from switching to alternative suppliers of number plate blanks.
These exclusive agreements limited the ability of Uniplate’s rivals from accessing customers for number plate blanks in the market. Customers who were tied in these exclusive agreements by Uniplate were similarly unable to access competitor blanks even when competitors’ prices were lower. The Tribunal found that Uniplate strictly enforced its exclusive supply agreements and often threatened customers with litigation if they purchased or attempted to purchase their requirements from Uniplate’s rivals. This discouraged entry and expansion of competitors in the blanks market because the demand for blanks was tied up in contracts enduring for ten years or longer since some of the contracts contained automatic renewal clauses; and had no termination clauses.
Uniplate denied that its exclusive supply agreements were anticompetitive. Instead it argued that exclusivity was required in order to offer its embossing machines at a reduced price. It claimed that there were several efficiencies that arose from its exclusivity requirement. However, the Tribunal found that Uniplate was unable to substantiate its efficiency claims.
As the Tribunal noted in its decision “Our legislation places a special duty on dominant firms, which Uniplate has conceded it is, to not engage in exclusionary conduct without any pro-competitive justifications.”
The Tribunal concluded that Uniplate had contravened section 8(d)(i) of the Act and was liable for an administrative penalty.
This case arose due to the Commission receiving two complaints from market participants that Uniplate was abusing its dominance in the market. The first complaint was lodged by NNPR, a competitor of Uniplate in 2012. The second complaint was later lodged by JJ Plates, an embosser and customer of Uniplate. Following the receipt of these complaints the Commission decided to consolidate these complaints under a common investigation and a referral was filed with the Tribunal on 27 November 2015. The hearing commenced on 8 November 2017 and was heard over a period of 9 days.
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