The decision of the Competition Tribunal on the case between Sekunjalo Investment Holdings (SIH) and companies it is associated with – the Sekunjalo Group (Sekunjalo) – and nine of the country’s biggest banks, is expected any day now.
Sekunjalo has accused Nedbank, Standard Bank, First Rand Bank, Absa Bank, Mercantile Bank, Sasfin Bank, Investec Bank, Bidvest Bank and Access Bank (the banks), of collusive practices in their concerted termination of the banking relationship with them.
The banks are refusing to provide banking and payment services to Sekunjalo, which, argues Sekunjalo among other points the Group has raised, constitutes an abuse of dominance or collusive conduct in contravention of the Competition Act.
Some of the factors that Sekunjalo wants the Tribunal to consider for it to make its prima facie case for interim relief, are prohibitive practices, their modus operandi by which the banks operated to close Sekunjalo’s accounts, as well as an abuse of dominance.
During the Sekunjalo hearing, the Group’s advocate, Vuyani Ngalwana SC, urged the panel presiding over the case to do more than just raise eyebrows, asking them to make the prima facie (accepted as correct until proven otherwise) finding that there is a “group boycott”, and collective dominance by the banks when it comes to the Sekunjalo Group.
The Competition Commission defines abuse of dominance, as the abuse of a dominant position by a firm, which among other things, may include exclusionary acts such as refusal to supply scarce goods to a competitor, and denying competitors access to an essential facility, among others.
The Competition Act prohibits the abuse of a dominant position by firms in a market, but does not prohibit firms from holding a dominant position.
An expert in Competition Law and regulation, with a particular focus on competition litigation, attorney Lucinda Verster, said in an interview that while the concepts of “group boycotts” and “collective dominance” had been developed in the US and European Competition Law, they had so far not been incorporated into South African law.
Verster, however, said it was possible that the two concepts could eventually be included in South African law, but it would take a process of a few years.
“For instance, when the Competition Act changed in 2016, it was the first time that there were proposed changes, and it took a period of basically three years within which all stakeholders concerned provided comment, and eventually in 2019, some of these provisions came into effect,” Verster said.
“If they want to include those concepts now, it would be an amendment to the Act, so it would have to go through the same channels before it got into the Government Gazette. It’s a process, not something that you can do overnight. It’s not that simple,” said Verster.
The issue of abuse of dominance returned to the headlines last week following the referral by the Competition Commission to the Tribunal for the prosecution of the social media giant, Meta Platforms Inc (previously known as Facebook Inc), and its subsidiaries, WhatsApp Inc and Facebook South Africa, on the same grounds.
The Commission alleged that Facebook decided in or about July 2020, to offboard GovChat and #LetsTalk – a technology start-up that connects the government and citizens – from the WhatsApp Business Application Programming Interface (API).
The Commission also said that Facebook had imposed and/or selectively enforced exclusionary terms and conditions, regulating access to the WhatsApp Business API – mainly restrictions on the use of data.
Sekunjalo chairperson Dr Iqbal Survé argues that the removal of Loot Online (a subsidiary of Sekunjalo that competes with Takealot), from the market, will strengthen the market dominance of Takealot, to the detriment of consumers.
“Sekunjalo is a self-funded, black-owned investment group which has developed an independent pathway from the banks and the financial establishment. It is in many cases the first black company on scale to compete with companies that the banks have interests in, such as in media, ICT, eCommerce and the food and fishing industry,” Survé said.
Survé also cites another example of what he says should be a red flag to the Competition Commission and Tribunal, saying: “In our affidavit, we provided evidence of how on the day of receiving the termination letter from ABSA, Premier Fishing’s corporate adviser, Vunani Capital CEO Mr Shaun Naidoo, received a call from a competitor of Premier, informing him that they wanted to acquire Premier. Only the banks could have informed them of this simultaneously to Premier receiving that letter.”
He argues that the action of the banks has the effect of weakening the Sekunjalo Group, not just its specific investments, but also creating difficulties when it comes to BBBEE partnerships.
The action of the banks creates a situation where such competitors of Sekunjalo – in which the PIC and the banks have financial interests, for example – benefit at the expense of Sekunjalo. | Additional reporting by Sizwe Dlamini