BusinessPotato supplier HZPC charged by South African Competition Commission

Potato supplier HZPC charged by South African Competition Commission

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South Africa’s Competition Commission has referred a Netherlands-based seed potato breeder and its exclusive South African distributor to the Competition Tribunal for prosecution, for abuse of dominance in relation to the exclusive supply of Mondial seed potatoes varietal in the country.

Wesgro Potatoes, a potato seed grower in South Africa, has an exclusive agreement with HZPC Holland to sell the Mondial seed potato varietal to commercial farmers. In turn, commercial farmers grow the potatoes for sale to consumers as table potatoes.

HZPC is the developer and breeder of the Mondial seed potato varietal. Its business is the cultivation and marketing of certain seed potato varieties across the world.

The Mondial seed potato varietal are planted across potato producing regions in South Africa and are distributed nationwide. The Mondial potato is regarded as one of the finest in the market.

The Competition Commission said when a new variety of potato is created, a breeder is afforded exclusive rights over the variety for 20 years. This is a type of intellectual property right that enables the breeder to recoup research and development costs through the exclusive rights.

HZPC was granted a plant breeder’s right over the Mondial seed potato varietal in October 1993. The exclusive rights therefore expired in October 2013.

The Commission said the Mondial seed potato varietal should therefore be available in the open market, free of intellectual property right restrictions.

The Competition Commissioner, Tembinkosi Bonakele, initiated a complaint and started an investigation against Wesgro and HZPC in March 2015.

The Commission contends that HZPC and Wesgrow are unlawfully refusing access to other seed growers to the Mondial variety, despite expiry of the plant breeder’s right.

The continuation of the exclusivity between HZPC and Wesgro means that other South African potato seed growers are excluded from growing and selling the Mondial seed potato varietal to farmers, said the Commission.

The Commission is of the view that Wesgro and HZPC’s conduct has resulted in maintaining insurmountable barriers to entry to the market for producing and supplying Mondial seed potato varietal and has had a particular impact on the potential competitors of Wesgro who seek to produce and supply Mondial seed potato varietal.

The Commission also contends that this has had substantially prevented and/or lessened competition in the market for the production and supply of Mondial seed potato varietal.

The Commission is seeking an order from the Tribunal that both companies contravened the Competition Act and that Wesgro must pay a fine equal to 10 per cent of its annual turnover.

In addition, the Commission is asking that the license agreement between Wesgro and HZPC be declared void, along with all other related agreements between Wesgro and its customers.

The Commission also wants the Tribunal to interdict the companies from entering into similar agreements in future.

Source:  African News Agency (ANA)

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