The Namibian Competition Commission(NCC) has decided to institute court proceedings against a distributorship marriage between office automation equipment suppliers, Namibia’s Maxes Office Machines (Pty) Ltd and South African-based Riso Africa (Pty) Ltd.
This is for alleged exclusive dealings after an NCC investigation revealed that the two companies have contravened the Namibian Competition Act.
The competition watchdog announced this last Friday.
The commission found the agreement to be in contravention of Section 23(1) read with Section 23(2)(b), 23(3)(e) of the Act (limiting or restricting market outlets or access).
As a result, the commission has resolved to institute proceedings in Court against the two companies for them to declare that they have contravened Section 23(1) read with Section 23(2)(b) and Section (3)(e) of the Competition Act. This is basically to demand that they cease with the conduct and to restrain from engaging in the conduct in the future.
Furthermore, the commission seeks an appropriate pecuniary penalty against the duo in terms of sections as stipulated by the Act, taking into account the factors stated in Section 53(3) of the Competition Act.
The commission will also want the court to order the two respondents to pay the costs of the proceedings.
In terms of the two’s conduct, they have entered into an exclusive distributorship agreement which has been in existence since 1996.
The commission explained that the exclusive distributorship agreement designated Maxes as the sole distributor, service provider and retailer of Riso Africa’s office printing equipment, associated products and services.
“This type of conduct creates barriers to entry into the market,” the commission argued.
The exclusive agreement prevents interested distributors from trading in the supplying of Riso Africa’s office printing equipment and associated products, as well as providing after-sale services to those products, the investigation revealed.
The commission is of the view that this exclusive distributorship agreement “is harmful to fair competition”.
As part of its business activities, Maxes purchases office automation equipment from its suppliers, distributes and sells them to end-users, and thereafter renders after-sale services and support to its clients.
The office automation equipment supplied by Maxes includes high-volume digital printing machines and duplicating machines.
Riso Africa, on the other hand, is Africa’s representative of Riso Kagaku Japan that manufactures and supplies two types of office printing equipment, the Riso Digital Duplicators and Riso ComColour Inkjet Printers.
There are, however, other products available in Namibia such as Duplo, Ricoh and Nashua which compete with the Riso digital duplicators.
The watchdog’s investigation found that the Riso digital duplicators make up a substantial part of the market.
The commission’s investigation was concerned with the distribution of digital duplicators which are used for mass printing, used in schools and government offices such as the directorate of education and other public and private institutions that require mass printing.
As a result of the exclusive agreement, the commission’s investigation found that “there is no intra-brand competition as far as the distribution of the Riso-related products is concerned”.
On the other hand, intra-brand competition was found to exist between other brands of digital duplicators.
Other brands are also not distributed through exclusive distributorship agreements and any interested party can distribute such brands, the commission found.