Woolies 'protecting its brand'

The case was to be heard before the Competition Tribunal on Thursday, but the tribunal announced that the interim relief application filed by Serious Foods against Woolworths will not proceed.

A Woolworths statement on Thursday morning said that the case had been settled and that Dennis Hamer of Serious Foods had undertaken to withdraw his urgent application from the competition authorities.

Serious Foods, which has a franchise agreement with Woolworths to run a Woolworth Food retail outlet in Pretoria, was protesting about Woolworths forcing it to charge prices that do not offer competition to other Woolworths outlets.

Serious Foods complained that Woolworths was behaving anti-competitively by price-fixing by using centrally loaded prices automatically charged to customers at the point of sale. A store owner does not have the ability to upload a different price on the system.

According to Woolworths, however, their existing pricing system does allow individual store owners to offer customers lower prices. An updated in-store management system is being implemented for franchisees nationwide in order to further improve this functionality.

Serious Foods also said the franchise agreement required it to submit its advertising campaigns to Woolworths for approval. While that in itself is not anti-competitive, the effect of an unreasonable refusal to permit advertising that suggests that its prices are lower than Woolworths-owned outlets is anti-competitive.

Woolworths said: "In respect of advertising, Woolworths seeks to maintain the integrity of the brand at all times and, to this end, requires that all business partners reflect the brand in a manner consistent with Woolworths brand principles."

- I-Net Bridge