Case study on south african breweries ltd sab

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The factual background [2] BySAB held seven licences for the manufacturing of beer, with an annual brewing capacity of 3.

Twelfth to fourteenth respondents have concluded franchise agreements with SAB whereas second to eleventh respondents have entered into wholesaler agreements with SAB. In addition, a franchise agreement, unlike a wholesaler agreement, has an initial term of ten years. Save for this distinction, there is no material difference between wholesaler agreements and franchise agreements.

An AD is assigned an exclusive territory to service. No other AD or depot is appointed or permitted to service this territory.

ADs are required to adhere to strict service standards. The ADs do not independently develop their own markets and then sell the product to that market at a margin. SAB provides the ADs with the training of management and staff and, where required, the funding on favourable terms.

This fee compensates the ADs for warehousing expenses and provides a reasonable return on related investments. Secondly, a delivery fee is paid to an AD for every unit delivered.

This fee compensates the AD for delivery expenses and likewise provides a reasonable return on related investments. However, these independent distributors do not receive the same fees for distribution.

These direct deliveries account for approximately 2. They accept orders placed by customers in their respective distribution areas, they receive beer from the relevant brewery, which is then stocked in an insulated warehouse.

They deliver the beer to customers, provide for customers to call and collect beer from their premises and they engage with the sales team of SAB in their designated areas. The ADs deliver quantities from a minimum of ten cases of beer and they do so at least weekly to customers in their defined area.

Over the minimum prescribed size, they are obliged to deliver to all customers in their allocated area, regardless of where a customer is situated.

The size of the truck required to perform these deliveries is one that can transport 18 pallets; thus it is a large vehicle. Primary distribution costs are the costs of distributing beer from its breweries either to the depots or to the ADs.

By contrast, secondary distribution costs are the costs incurred in distributing beer from the depot or the ADs to retail customers. These costs are split into two; firstly, distribution to customers that are located within a 50 km radius and secondly costs incurred in delivery to customers located beyond the 50 km radius.

Bilderberg Conferences

The 50 km radius is considered to be a free delivery zone. In terms of s 4 1 b ii of the Act, the Commission argues that respondents are in a horizontal relationship with each other. The relationship is of such a character to justify the application of s 4 1 b ii of the Act to the distribution structure adopted by SAB.

In the event that s 4 1 b of the Act is not applicable, the Commission contends that the respondents are in a vertical relationship; that is between SAB, as the manufacturer of beer, and the ADs as distributors of this beer.

This relationship justifies a conclusion that there was a substantial preventing or lessening of competition as a result of these agreements entered into between SAB and the ADs. In terms of s 9 1 of the Act, the Commission contends that the sale of beer products by SAB to the ADs are equivalent transactions to the sale of bulk product by SAB to independent distributors, in circumstances where both the ADs and the independent distributors provide distribution services on behalf of SAB.

It is argued that, as these transactions are equivalent, the favourable approach of SAB to the ADs represented discrimination against independent distributors which discrimination has the effect of substantially preventing or lessening competition in the relevant market.

Section 5 2 is invoked by the Commission to argue that SAB engaged in a practice of retail price maintenance. The horizontal case [16] The horizontal case brought by the Commission is based upon an alleged restrictive horizontal practice in terms of s 4 1 b ii of the Act.Vernon Jordan introduces Govenor Clinton to world leaders at German Bilderberg gathering First Friend Vernon Jordan Is a Man Comfortable With Power.

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Clover South Africa

The Washington Post, January 27, Marc Fisher He is a presidential adviser without title or salary. By , SAB commanded around 98 per cent share from the South African Asahi Breweries Ltd beer current market and was regarded as one among the bottom Value producers of beer in the world.

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Asahi Breweries Ltd Case Study Help - Case Solution & Analysis

Get an overview of major world indexes, current values and stock market data. This report deals with identifying the strategic issues and options available to South African Breweries (SAB) based on the understanding from the case study “SABMiller” (Johnson et al., , pg.

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