The country’s competition watchdog has called out two suppliers of office automation equipment, dealing in high-volume digital printing machines and copy machines, for contravening legislation that ensures fair competition. However, despite the Namibian Competition Commission (NaCC) deciding to institute court proceedings against Maxes Office Machines (Pty) Ltd and South African-based Riso Africa (Pty) Ltd, it has still left the door open to settle the matter out of court.
The NaCC has accused the two companies of exclusive dealings after its investigation revealed the respondents contravened the Namibian Competition Act No.2 of 2003. The court proceedings aim to seek, amongst other measures, monetary compensation for the contravention and aim to prevent the two companies from engaging in illegal conduct in future.
“Notwithstanding the above, the commission records that it is willing to engage the respondents with the objective of settling the matter in terms of Section 40 of the Competition Act and to avoid proceedings in terms of Section 38 of the Competition Act,” read a statement issued by NaCC spokesperson Dina
//Gowases.
The NaCC explained that 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 namely, the Riso Digital Duplicators and Riso ComColour Inkjet Printers. The investigation was concerned with the distribution of digital duplicators, which are used for mass printing, used in schools, government offices such as the Directorate of Education and, other public and private institutions that require mass printing.
In terms of the conduct, the respondents have entered into an exclusive distributorship agreement which has been in existence since 1996. 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 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 commission is of the view that this exclusive distributorship agreement is harmful to fair competition. 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),” the NaCC statement reads.
The watchdog noted that there are however other products available in Namibia such as Duplo, Ricoh and Nashua which compete with the Riso digital duplicators. However, the commission’s investigation found that Riso digital duplicators make up a substantial part of the market and as a result of the exclusive agreement, there is no intra-brand competition as far as the distribution of the Riso related products is concerned.
“On the other hand, however, 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 NaCC established.