Think I have annoyed the engineers enough in other threads, so maybe time to turn to the legal eagles
Relevant section of Competition Act, 89 of 1998 (part relevant to the “current” victron issue is 5(2))
5. Restrictive vertical practices prohibited
(1) An agreement between parties in a vertical relationship is prohibited if it has the effect of substantially preventing or lessening competition in a market, unless a party to the agreement can prove that any technological, efficiency or other pro-competitive, gain resulting from that agreement outweighs that effect.
(2) The practice of minimum resale price maintenance is prohibited.
Interestingly the prohibition of resale price maintenance in South Africa is per se unlawful (i.e. no reason can excuse it).
while some provisions of the Competition Act allow for the weighing up of anti-competitive effects against pro-competitive gains to determine the lawfulness of an agreement or practice, no “rule of reason” analysis is permitted where minimum resale price maintenance is concerned – it is outright unlawful. [ source ]
It is apparently also not necessary to show that the conduct/policy actually lead to an anti-competitive outcome
Section 5(2) is an outright or, in the language of antitrust jurisprudence, a per se prohibition. In other words simply
proving the existence of the specified restrictive practice is sufficient for making a finding under Section 5(2). In contrast with violations alleged in terms of Section 5(1), Section 5(2) does not require that anti-competitive effects be established nor does it permit of an efficiency defense. [ source ]
So, if there is evidence of possible penalties (lowering discounts or refusing to supply in future) then Victron might struggle to not cough up for this (even if this happened in the past and regardless of motivation of the complainant).
It is unlikely that things got to this stage (i.e. Competition Commission referring to the Competition Tribunal) without this kind of evidence. The Competition Commission has powers of search and seizure and to summons.
Unless there are disputes around fact (for instance Victron might claim that the distributors chose to not “allow” discounts beyond a certain price, and “made up” the excuse that “Victron says we are not allowed to…”) I suspect Victron will negotiate for a consent order, with the Competition Commission before this goes to full litigation - like this one involving Toyota (see, I do read the posts…) where they do not admit liability.
Edit: @plonkster also noted the “I do not have inside info” part - my post is not intended to rehash the topic
Your post is excellent, and a lot of what you write, I also found last night as I was doing some “light reading”. The “per se” distinction. There are places, some US states I think?, where it is not per se illegal. You can mount a “actually this helps competition” defense.
Over here, sending a single email to a downstream distributor and telling them not to sell things too cheaply, whatever your motivation may be… is probably sufficient to get you in trouble.
apparently was per se for almost 100 years and was reversed in 2007 (see first source link in my previous post)
think precedent has been set already (barring the unknown facts that could come out if this goes the whole tribunal route) - but I suspect many people/businesses do not know about the competition act or more likely often choose to not pursue it since it might also impact negatively on future business prospects if there is a perceived reputation to “spoil the game for everyone”.
Read this on Business Day - The Competition Commission has referred a Dutch supplier of solar power equipment, Victron Energy, for prosecution at the Competition Tribunal, alleging it forced distributors of its products to sell goods at a set price, which is illegal.
There is an official statement that was sent out to the distributors. I have not seen it yet, but if you are curious, welcome to ask your reseller. What I can say, at no point was the company protecting its own bottomline. The case has indeed been ongoing for a long time, and the outcome came last week. The timing is somewhat unfortunate, but it is what it is. So… don’t expect prices to come down because of this. It was never artificially raised.
You’re talking about the contract between the installer and Victron? To me this is something Victron have a right to insist on. I’ve worked for a company that had a franchise for an international brand name product, and the brand was very picky about the stock of spare parts we had to hold, the accuracy of our multimeters, and even the type of solder that we used. I get that. They are trying to protect their brand.
And this is something the local supplier has to take into account when working out what he can sell the goods for.
But heaven’s sake, let him do that.
But give him a certificate too so that he can prove to prospective customers that he is a properly authorised person in good standing with Victron. Because there will be people who are getting their inverters elsewhere, and in such cases the customer is left with no protection.
When I worked for the company I’m busy not naming, “parallel importers” emerged who were sourcing the same product from cheap markets in the East., The customer goes a shop they supply, says “ooh! That’s cheap here. I’ll have one of those” and thinks he is going to get backup.
Our position was difficult because The Brand had told us that we had to honor the guarantee of any of their equipment bought anywhere in the world. If somebody buys in New York then can’t get it fixed whilst he’s on holiday in South Africa, that’s not a good thing. And this is what the parallel importers were taking advantage of. They could undercut any of our official dealers on price, because they did not have to include the cost of maintaining a service department.
In the end we agreed with The Brand that we would honour the guarantee, but we could charge a handling fee if the item had been bought from a local shop that we did not have any business with.
This resulted in angry customers who didn’t understand that the real villain was the parallel importer. Either way the reputation of The Brand suffered.
So yes, it is more complicated than just allowing anybody to sell the thing at any price they like and then let the invisible hand of the market move.
And that is in my opinion, why Victorn created has such an awesome 2nd hand market, as it matters none from whom I buy the 2nd hand part, the warranty stays in place. Victron will put the new owner in contact with the original dealer who sold the item originally. Any dealer/repairer close by will help.
How that all works behind the scenes, no idea. I have a manufacturer that backs up their products. Finish en klaar. And I pay for that with a smile, Happy Seller, Happy Buyer.
So Victron “pushed some buttons” to ensure aftersale services stay intact, and on par, ensuring their brand has a very good name year after year for decades on end.
Cause I don’t think for one moment that Victron did anything knowingly and on purpose to circumvent any laws.
Let’s see what comes of this fiasco. I’m sure stuff happens behind closed doors that would be very entertaining IF we could have been a “fly on the wall” in those meetings.
But no one cares … people only care when it affects their pocket. “Too expensive!” … “Why don’t I get support!” … the only two times.
One of the most interesting threads on this forum.
Just another idea to add to this discussion:
Huawei PowerMate comes with a swap-out warranty and I believe some others do the same. In this business model it is as if the manufacturer is directly taking responsibility for the support. They protect themselves by not allowing any tinkering. A customer can look at it and that is it. If you want to take it out of bypass mode, for example, you have to go to the DB board.
There is an app for the Customer, he can make any changes he likes to. The direct swap out is normally done by the distributors and they will give you a new unit, then send back the faulty one. The majority of new inverters in SA will do that, but its part of the R&D. These units are so new that they did not have the opportunity to build a solid reputation and they don’t want to struggle with support in the field, so they would rather pull it back into the repair centre to try and find / rectify the issue. We have access PowerM’s to worth of appr R29m, standing in a warehouse in midrand. I love the unit but they are selling slow, its like the south african market dont like them. We sold and installed a few, and I like them, especially for flats and Duplex/Simplex setups. Build in Fire suppression, True IP65 and can even be installed outside. Just a pity its not a bidirectional inverter.
