Rooibos Ltd accused of anti-competitive behaviour

Rooibos Limited (Ltd) has become the most recent referral to the Competition Tribunal after allegations of anti-competitive behaviour. This, as a result of them preventing rooibos tea farmers from dealing with competitors.

These allegations are said to follow on the back of a 2015 complaint from a competing rooibos tea processor.

“The commission’s investigation focused on Rooibos Limited’s monopolisation of rooibos tea supply from rooibos tea 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,” documented the Competition Commission.

The Commission has referred the complaint to the Tribunal for adjudication. “We are seeking an order from the Tribunal declaring that Rooibos Ltd has contravened the Competition Act and that the company is liable to pay an administrative penalty equal to 10 % of its annual turnover,” the Competition Commission explained.

Due to geographical and climate reasons, rooibos tea is only grown in the Western and Northern Cape, so its supply is limited. This puts pressure on the rooibos tea processors to remain relevant and competitive in the market.

Historically, rooibos tea processors obtained their supply of rooibos tea from farmers through one year supply agreements. However, in 2014 Rooibos Ltd introduced two exclusionary contracting strategies to lock-in or foreclose the supply of rooibos tea from farmers, thus starving its competitors, explained the Commission. 

Rooibos Ltd, currently the largest in the processing sector however, have responded by saying that this allegation has taken them by surprise.

“We’ve been speaking to the tribunal on and off for the past two years about anti-competitive issues. We are surprised at these claims that have now surfaced,” stated Martin Berg, managing director of Rooibos Ltd.

“We do not think we are guilty of these allegations at all. We plan on getting legal advice and defending ourselves,” added Bergh.

When asked if he thinks the tea industry is properly regulated with regards to market related competition, Bergh further responded: “Yes I think the tea industry is efficiently regulated when it comes to issues of this nature, regulations must just be applied properly.”

The Competition Tribunal were unfortunately unable to comment on the matter at this stage as the case is still to be heard.