HP cleared of anticompetitive accusations

The Competition Commission has dismissed a complaint by local computer maker and distributorMustek against its international rival Hewlett Packard (HP). The Commission dismissed the complaint because it could not find evidence of anticompetitive behaviour by HP. The commission said it would not refer the matter to the Competition Tribunal.

Mustek was seeking protection from the competition authorities, believing it’s actions were taken in the interest of free and fair trade. In 2009 the company filed a complaint against HP accusing it of flouting five sections of the Competition Act, including engaging in price discrimination, selling goods below their marginal cost and inducing customers not to deal with its rivals.

HP “was in no doubt we were operating within the confines of anticompetitive guidelines and we are pleased to put this issue to rest,” said Hedy Gorton, public relations manager for HP SA’s Enterprise Business.

The commission found HP granted wholesalers and retailers certain rebates, promotional discounts and incentive payments related to achieving certain sales targets. The commission found that HP’s occasional price negotiations, which are limited to resellers only, tended to maintain a maximum selling price, rather than encouraging a minimum resale price. This is a practice which competition authorities generally accept as positive for the market.

The commission established there was no evidence to suggest HP’s retailers did not discount over and above the rebates and incentives they received.

“HP does not monitor what these rebates are used for, and wholesalers and retailers are able to set their prices independently of HP,” the commission said.

The commission could also not establish that HP was dominant in the local personal computer market. HP’s share of the market — desktops or laptops — did not exceed 45% and there was no evidence to suggest that HP possessed market power.

“The personal computer market in SA appears to be competitive, as it is globally, with no single vendor possessing the power to sustain small but significant price increases for any length of time,” the commission said. It said the market shares of companies in the personal computer market varied significantly over time.

The commission could also not prove that HP was involved in price discrimination. It found that HP’s preferred partner programme was open to any wholesaler meeting its requirements.

“It is unlikely that HP’s preferred partner requirements will lead to substantial lessening of competition in the market for personal computers,” it said.

Mustek last month reported a 12% increase in profit for the six months ended December 31.

Mustek MD Hein Engelbrecht said yesterday that although the company was “slightly disappointed” by the findings, it respected them and would not pursue the matter.

“It is business as usual for us. But we will continue to monitor HP’s market behaviour,” he said.

By Angela Meadon