Rooibos Limited (Rooibos) – accused of pressuring rooibos tea commercial farmers not to deal with rooibos tea processors it competes with – has undertaken that it will not enter into any long-term supply agreements that restrict or prevent producers from supplying rooibos tea to its competitors.
 
The tea processor has also undertaken that its long-term supply agreements with producers will not be of a duration of more than five years.
 
This forms part of a settlement agreement between Rooibos and the Competition Commission (“the Commission”), which has now been confirmed as an order of the Competition Tribunal (“The Tribunal”).
 
In addition to the abovementioned undertakings, Rooibos will not be able to restrict access to completed production research it has contracted or commissioned. It will publish such on its website, within five days of receipt, without any restrictions or conditions. This type of research, relating to the production and harvesting of rooibos, can include clinical trials and studies. However, it specifically excludes business and trade secrets, own research, technical experience and advice. 
 
No admission of wrongdoing
 
Although Rooibos has made the commitments in terms of the settlement agreement, it has not admitted to any wrongdoing: “Nothing in this settlement agreement amounts to, or should be taken to imply, an admission of liability or wrongdoing for any prohibited conduct under the (Competition) Act…”
 
A full copy of the Tribunal’s order and the settlement agreement will be made available on the Tribunal’s website at www.comptrib.co.za 
 
Background
 
In July 2015, the Commission received a complaint against Rooibos alleging that the company had been engaging in anti-competitive conduct, including claims that Rooibos had induced rooibos tea farmers not to deal with its rival rooibos tea processors.
 
After completing its investigation, the Commission concluded, among others, that Rooibos had entered into long-term supply agreements between 2014 and 2018 whereby farmers were required to supply stipulated volumes of rooibos tea to Rooibos, to the exclusion of other processors who competed with Rooibos. In addition, the Commission concluded that Rooibos used its production research to induce producers to commit a stipulated amount of rooibos tea in order to gain access to the research. The effect of this was to significantly foreclose competitors of Rooibos from accessing rooibos tea or to prevent their expansion in the market.