Pharmaceuticals' case dismissed

The tribunal has also dismissed a subsequent application brought by the applicants to re-open the case, subsequent to the hearing of the main matter, and costs, including the costs of three legal representatives, were awarded to the manufacturers.

Five of the respondents were pharmaceutical manufacturers who, in 2000, established a joint exclusive distribution agency to distribute their products.

The manufacturers purchased one of the wholesalers, Druggists Distributors, and converted it from a wholesaler, trading on its own account, into an agency distributor which distributed the manufacturers' stock at an agreed fee.

The application was first heard two years ago, on which occasion the tibunal panel held that the manufacturers' joint ownership of the distribution agency contravened South African laws prohibiting agreements between competitors.

This decision was subsequently reviewed by the Competition Appeal Court, which remitted the decision to the Tribunal for further hearing.

Subsequent to the decision of the first panel, Druggists Distributors, now renamed Kinesis, was sold to Tibbett and Britten, a UK logistics services provider.

The wholesalers complained that they were no longer being afforded competitive access to the manufacturers' products, while claiming that they were compelled to purchase the manufacturers' products from Kinesis on the same terms available to the wholesalers' customers in the retail trade.

As a result, they maintained that they could no longer pass on discounts to their customers, the pharmacists, and so were effectively being squeezed out of the market.

However, the Tribunal concluded that the wholesalers had not established, for the purposes of interim relief, that the manufacturers had contravened any legislation.

Rather, the Tribunal concluded that changes in the mode of distributing pharmaceutical products and the reduced reliance on wholesalers reflected changes in market conditions - changes that had already profoundly altered the character of distribution across a wide swathe of the economy.

The Tribunal also found that the wholesalers had failed to establish the prima facie existence of an agreement between parties in a horizontal relationship.

All that has been established was the existence of a number of separate vertical arrangements between each of the manufacturers and Kinesis, their exclusive distribution agency. Nor were these vertical arrangements found to be in contravention of existing laws.

Nor, in the tribunal's view, had the applicants established the other conditions that had to be met in order to sustain a successful claim for interim relief.

In particular, the wholesalers had not established that they were suffering "serious or irreparable damage", as required for interim relief matters, but in fact were trading profitably in both pharmaceutical and non-pharmaceutical products.