Commission prosecutes Pailpac (Pty) Ltd for anti-competitive conduct

pailpac
05 Jul 2024

The Competition Commission (Commission) has referred Pailpac (Pty) Ltd (Pailpac) to the Competition Tribunal (Tribunal) for prosecution for the abuse of dominance in contravention of the Competition Act.

The Commission alleges that Pailpac entered into exclusive agreements which required or induced certain major paint manufacturers not to deal with the company’s market competitors for the supply of injection moulded plastic containers used for the packaging of water-based paints.

This conduct is in breach of section 8(1)(d)(i) and/or alternatively 8(1)(c) of the Competition Act 89 of 1998 (as amended)(the Act). These sections of the Act prohibit a dominant firm from engaging in anti-competitive conduct which has the effect of excluding its competitors from the market.

Pailpac is a manufacturer of injection moulded thick-walled and wide-mouthed plastic packaging, also known as pails or buckets, which are supplied to paints/coatings manufacturers in South Africa. The injection moulded plastic containers are a critical input at the downstream level for the manufacture and supply of paints and are specifically used as packaging material or containers in the coatings industry. The specific plastic containers that are the subject of the complaint referral are those used for the packaging of water-based paints.

The Commission alleges that Pailpac concluded supply agreements, which contain exclusivity clauses, with six major paints manufacturers, requiring these manufacturers to procure a majority or the entirety of their supplies of containers for the packaging of water-based coatings exclusively from Pailpac. The six major paints manufacturers are Plascon, Dulux, Prominent Paints, Universal Coatings and Laminin Coatings.

The Commission seeks an order that Pailpac’s exclusive agreements with paints manufacturers contravenes the Act, that the exclusivity provisions of the relevant supply agreements be declared null and void, and that Pailpac is liable for the payment of an administrative penalty equal to 10% of its annual turnover in the country.

Article sourced from The Competition Commission South Africa.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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