Clock is ticking on Shoprite fine

Retailer could be made to fork out R15bn over exclusive ticket sales deals struck by subsidiary Computicket

The Competition Commission, which is chasing a R15bn fine against Shoprite, has 30 days to restate its case against the retailer and its subsidiary Computicket if it hopes to convince the tribunal that the retailer should be fined. At stake is the size of the fine the commission can ask for.

The Competition Commission, which is chasing a R15bn fine against Shoprite, has 30 days to restate its case against the retailer and its subsidiary Computicket if it hopes to convince the tribunal that the retailer should be fined.

The commission, which acts like a prosecutor on competition matters, contends that Computicket breached the Competition Act by entering into exclusive agreements to be the sole seller of tickets for music festivals and concerts from 2013 to 2018 and thus stopped other ticketing firms from being able to trade.

The case filed in December 2018 accuses Computicket of abusing its dominant position but it has yet to be heard as it has been delayed by a legal battle over whether the commission can charge Shoprite for Computicket’s alleged infractions.

At stake is the size of the fine the commission can ask for. If a company is found guilty of breaching the Competition Act, the tribunal, which acts like a court on competition matters, can exact a maximum penalty of 10% of turnover.

Shoprite’s revenue in 2020 equalled R156bn, meaning a fine could equal more than R15bn.

However, Computicket is a much smaller entity and would be fined far less.

The commission’s insistence on trying to earn a much higher fine could create a negative investment environment, but the technical argument that Shoprite be held liable for its subsidiary’s actions is based on a European interpretation of a particular point in competition law.

The commission argues that Shoprite is liable as the parent firm and claims it had influence over Computicket’s decision to enter into exclusive arrangements to sell tickets for theatre shows and festivals.

Much of the long-running court battle addresses a technical point of law over whether the two businesses can be charged as a “single economic entity”.

In 2019 the tribunal found that the commission had not made a proper case about why Shoprite must be charged for Computicket’s exclusivity agreements and ordered the commission to redo its legal papers and struck down a particular legal argument against Shoprite.

The commission appealed this decision at the Competition Appeal Court and in April 2020 won a technical argument allowing it to continue to use a particular legal argument against Shoprite, but it was still required to redo its case.

Shoprite appealed a technical legal point at the Constitutional Court, which last week declined to get involved in the matter.

This means the commission can go after Shoprite using its chosen legal argument, but it also has to abide by the tribunal’s earlier order and redo its entire case, which the tribunal found “opaque”.

This is not the first time the commission has been told to rectify its legal arguments.

The tribunal also required the commission to redo its legal papers against local and foreign banks that were allegedly involved in fixing the price of dollar-rand pairs in the ongoing case.

The 2019 amendment to the Competition Act would make it easier for the commission to go after Shoprite or any company for their subsidiary’s behaviour, but Shoprite lawyers argued that the commission was trying to use the new law to prosecute the retailer for alleged infractions in the years before the law was passed.

Computicket has already been found guilty of enforcing exclusive ticket-selling agreements from 2005 to 2010 and fined R20m in a legal case that is completed. This current case for the period from 2013 differs in that the commission must prove Computicket excluded other ticket sellers from operating, even as new companies such as Webtickets grew in size.

In a statement, Shoprite said the matter that the Constitutional Court chose not to hear revolved around “certain technical legal points”. It noted the actual case against it and Computicket can only be heard by the tribunal once the commission has amended its complaint as ordered.