Prominent solar company fined millions for anti-competitive behaviour in South Africa

The Competition Commission has concluded a settlement agreement worth R14 million with Victron Energy regarding alleged anti-competitive pricing practices.

Victron Energy, headquartered in Almere-Haven in The Netherlands, is one of the best-known alternative energy brands in South Africa.

The company designs and sells electric power conversion products for mobile and other off-grid applications.

Its products include sine wave inverters, battery chargers, DC/DC converters, transfer switches, battery monitors, batteries, solar panels, and solar charge regulators.

The Competition Commission said the R14 million settlement was reached on 6 June 2024 related to alleged minimum resale price maintenance.

Resale price maintenance is an agreement by the manufacturer that prevents downstream distributors or resellers from reselling a product below a stipulated price.

This conduct restricts and prevents price competition downstream as it restricts the pricing autonomy of distributors or resellers.

Resale price maintenance is prohibited under section 5(2) of the Competition Act, 89 of 1998.

On 11 December 2023, the Competition Commission referred a complaint against Victron to the Competition Tribunal.

The complaint was linked to Victron allegedly engaging in minimum resale price maintenance from March 2020 to at least the end of 2022.

Victron relied largely on its distributors to implement and enforce the practice of minimum resale price maintenance by online stores for end users in South Africa.

The Commission further alleged that Victron published a recommended retail price list on its website and provided updated pricelists to its distributors quarterly.

Although the list indicated that it was a recommended price, Victron, in practice, insisted on a maximum discount from its recommended retail price list.

In addition, it was alleged that Victron instructed its distributors to ensure that its online store customers comply with the maximum discount practice.

It allegedly threatened to either lower the discount provided to the distributor or stop supply to the distributor.

The distributor would then, in turn, use similar threats of either lowering the discount provided to the online store or stopping supply to its online store customer to ensure compliance.

During the investigation, Victron asserted that the principal objective of the pricing discussions was to address the issue of end customers being sold Victron products.

The company said it was concerned that customers were not provided with the appropriate after-sales and technical support.

Despite the complaint, Victron Energy has denied liability for a contravention of the Competition Act.

The Commission maintained that the conduct contravened section 5(2) of the Competition Act regardless of any justifications the firm involved may have proffered.

In terms of the settlement agreement, Victron does not admit that it contravened the Competition Act but has agreed to pay R14,232,581.

Victron will implement a competition law compliance program to ensure compliance with the Competition Act going forward.

This program will include all employees, management, directors, and agents who participate in any commercial activities in South Africa.

The settlement agreement has been referred to the Tribunal and, once confirmed, will end the complaint referral proceedings currently before the Tribunal against Victron.