Out-Law Analysis 1 min. read
Lessons from Victron Energy minimum resale price maintenance settlement
04 Jul 2024, 1:34 pm
A recent settlement reached between a renewable energy company and South Africa’s competition authority has highlighted the need for businesses to develop policies and practices that promote compliance with competition laws.
The Competition Commission of South Africa announced (4-page / 207KB PDF) that Victron Energy B.V., a developer and distributor of electric power conversion products for mobile and other off-grid applications, has agreed to pay more than R14 million (approximately $777,000) and implement a competition law compliance programme to settle complaints of anti-competitive conduct against it. If the Competition Tribunal confirms the agreement, it will bring an end to the Commission’s complaint.
In the complaint, the Commission alleged that Victron relied on its distributors to implement and enforce the practice of minimum resale price maintenance in respect of Victron products, sold by online stores to end users in South Africa. Those products include sine wave inverters, sine wave inverter/charges, battery chargers, transfer switches, battery monitors, batteries, solar panels, and solar charge regulators.
The practice of minimum resale price maintenance, also called vertical price fixing, is a prohibited restrictive practice in South Africa, under section 5(2) of the Competition Act. It is also prohibited in other jurisdictions. It involves the supplier or manufacturer of a product specifying the price, or the minimum price, at which a downstream distributor or retailer can resell those products. Resale price maintenance can facilitate cartel activity and create significant barriers to entry for new entrants. However, a supplier or producer may recommend a minimum resale price, provided that it is made clear that the recommendation is not binding, that the product has its price stated on it, and the words “recommended price” appear next to the stated price.
This case has arisen in the context of a booming South African solar energy market. Significant growth in the market over recent years is set to continue, with one estimate predicting that the installed base will grow from 6.68 gigawatts in 2024 to 11.03 gigawatts by 2029. This will naturally lead to growth in the sector, job opportunities, product innovation, imports, and foreign investment.
As local and international companies look to exploit commercial opportunities in markets, they need to prioritise establishing comprehensive competition law compliance programmes – and then regularly review and updating these programmes – to ensure ongoing adherence to legal requirements in the jurisdictions that they operate. This will foster a risk-averse and compliance-based business environment.
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