The Namibia Competition Commission (NaCC) has dragged Namib Mills to court for allegedly abusing a dominant position in the market for the production and supply of wheat flour which contravenes Section 26 (1) read with Section 26 (2) (b) and (d) of the Competition Act.
According to NaCC this abuse came about when Namib Mills concluded a loan agreement with a number of bakeries with a clause that required them to purchase their wheat flour exclusively from Namib Mills.
Standing in for Namib Mills, attorney from Theunissen Louw & Partners, Andrew Theunissen argued that the loan agreements, to the contrary, were pro-competitive and introduced new players in the industry.
“By issuing loans to a number of bakeries, the first responded assisted new start-ups, small and medium enterprises in particular, to operate viable businesses and also assisted a number of existing bakeries to acquire better and improved equipment,” said Theunissen.
It also came to light that the value of the bakery loans from Namib Mills varied from N$50 000 to N$1 million which were topped up by a range of support services to customers free of charge.
However, the court also heard that the exclusivity clause was later removed but Namib Mills argued that this did not mean that it acknowledged the clause to be unlawful.
“By June 2014, when the exclusivity clause was removed, only 27 bakeries still had loan agreements in place. As such a limited number of bakeries entered into a loan agreement with the first respondent, less than 10% in 2014 and no more than 17% in 2011, when the highest number of loans were in place,” said Namib Mills through Its lawyer.
It also argued that a number of bakeries went on to also purchase wheat from other suppliers other than Namib Mills even when the agreement was still in place.
Namib Mills thus denied that the loan agreements formed the subject of the complaint fall within the scope of Section 26 (2) (b) and (d).
However, the case with the commission is that Namib Mills is dominating the production and sale of wheat flour.
“In terms of rule 36 of the Commission’s Rules, an undertaking that has a market share of 45% or more of the relevant market has a dominant position and is thus automatically assumed to have market power.”
According to the commission, Namib Mills concluded 54 bakery loan agreements with bakeries in Namibia. ?
Lawyers, Patrick Lauta, Anthony Gotz and Rafik Bhana stood in for the commission while Bokomo Namibia (Pty) Ltd was listed as second respondent.