Vol. 404, No. 19719, 5 February 1999
GENERAL NOTICE
Notice 89 of 1999
DEPARTMENT OF TRADE AND INDUSTRY
COMPETITION BOARD
INVESTIGATION IN TERMS OF SECTION 10 (1) (a) OF THE MAINTENANCE AND PROMOTION OF COMPETITION ACT, 1979 (ACT No. 96 OF 1979)
The Competition Board hereby gives notice that it is undertaking an investigation in terms of section 10 (1) (a) of the Maintenance and Promotion of Competition Act, 1979 (Act No. 96 of 1979) ("the Act"), to determine whether—
the refusal by pharmaceutical manufacturers who have contracted with International Health Care Distributors (Pty) Ltd (IHD), to deal directly on a non-discriminatory basis with pharmaceutical wholesale distributors or any other customers in the private sector of the market; and/or
the proposed contractual arrangements between pharmaceutical manufacturers and Synergistic Alliance Investments (SAI) whereby the former would not deal directly on a non-discriminatory basis with pharmaceutical wholesale distributors or any other customers in the private sector of the market, once SAI is established,
constitute a restrictive practice as defined in section 1 of the Act
The private sector of the market includes all persons or institutions permitted by law to deal in medicines or who are authorised by law to dispense medicines. These would, in turn, include pharmaceutical wholesale distributors, retail pharmacies, dispensing general practitioners, private hospitals and clinics. Sales to the State are excluded from this investigation.
By way of background to the investigation, and without in any way restricting the application of this notice, the following information is relevant: A number of pharmaceutical manufacturers have contracted with IHD in terms of which the latter performs a distribution function on an exclusive basis. Other pharmaceutical manufacturers have indicated that they will also shortly be contracting with SAI to perform a similar function on their behalf. The complainant, a large pharmaceutical wholesaler, has presented evidence to the Board which suggests that the practice is a restrictive practice since it restricts competition at the wholesale-distribution level, which alleged restriction on competition has the effect of raising prices.
In their submissions persons should give due attention to an appropriate delineation of the relevant market(s) and the effect that exclusive distribution agreements of this nature have in the relevant market(s). Attention should be given, inter alia, to the nature of the product, and the extent to which said nature and the nature of the major customer groupings" purchasing patterns would be relevant.
It is also important to take due cognisance of the fact that horizontal collusion with regards to prices, conditions of sale, market sharing and tenders was prohibited in 1986 (Notice 801 published in Government Gazette No. 10211 of 2 May 1986). It follows that the current investigation cannot technically focus on aspects relating to practices which were prohibited in Notice 801.
Any person who has an interest in the transaction may, within 30 (thirty) days from the date of this notice submit written substantiated representations regarding the transaction to the Chief Director: Investigations of the Competition Board, Private X720, Pretoria 0001 [Facsimile (012) 322-5428] (Attention I.W. Meyer) (File R4/2//1/2/30).
With the view to promoting transparency in the administration of the Act, all the representations received are to be made available to other parties who have an interest in the investigation on a confidential basis. However, subject to the demands of confidentiality and in the event that parties wish to ensure that company specific information remains confidential, parties are requested to make two versions of their submissions available, namely one that shall remain confidential and one that may be disseminated to other parties who have an interest in the matter.