Rooibos Ltd charged by Competition Commission
The Competition Commission has charged Rooibos Limited with abusing its position in the marketplace.
The commission has charged the company with abuse of dominance and referred the matter to the Competition Tribunal for prosecution.
Spokesperson Sipho Ngwema says this follows an investigation that began in 2015.
“The commission received a complaint from a rooibos tea processor in 2015. The investigation focused on Rooibos Limited’s monopolisation of rooibos tea supply from commercial farmers, in order to foreclose its competitors in the processing level of the value chain or prevent the expansion of its rivals in the market.”
Ngwema says there are about 220 commercial farmers producing rooibos in the Western and Northern Cape and only a few contribute to the bulk of the total production.
“Rooibos Ltd remains a dominant player in the processing of rooibos tea by virtue of the fact it it inherited assets and the monopoly position previously occupied by the Rooibos Tea Control Board which was established in 1954 by the previous government,” he says.
Ngwema says Rooibos Ltd introduced exclusionary contracting strategies that locked in volumes of rooibos tea production from commercial famers in the company’s favour.
‘’It negatively affected its competitors in the market for the bulk processing of rooibos tea. Subsequently Rooibos Ltd volumes of rooibos tea purchased from farmers, which were in serious decline at the time, significantly escalated and its main rival purchases of rooibos tea either declined or stagnated, thus threatening the competitive process in this market” says Ngwema.
Ngwema says the commission wants the Tribunal to declare Rooibos Ltd in contravention of the Competition Act. If found guilty, the company is liable to pay a penalty equal to 10% test annual turnover.