Sangengalo Marble & Granite files a complaint with the Competition Commission South Africa

Sangengalo Kitchen Enterprises CC, trading as Sangengalo Marble & Granite files a complaint with the Competition Commission South Africa against International Slab Sales (Pty) Ltd and/or Caesarstone South Africa.

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Background:

In 2016, Sangengalo Marble & Granite was the number three (3) fabricator and installer of Caesarstone in the Western Cape, based on volume. This position changed dramatically in the latter half of 2016 and in 2017, as the processing and sale of their own imported and trade-marked brand of high quality and well-priced engineered stone slabs took traction. Besides continuing to process and install (smaller volumes of) Caesarstone, as well as selling their own trade-marked brand, they process and install a number of other reputable brands of engineered stone, marble & granite. Between August and September of 2017 Sangengalo Marble & Granite was approached directly on a number of occasions by Mr Rudi Eggers (MD) and Mr Trevor King (Marketing Director) with a contract offer that would prohibit Sangengalo Marble & Granite from importing their own range of engineered stone; strongly discourage them from selling any other brands, exclusively declaring loyalty to Caesarstone as a brand of first-choice, and “adhering to the recommended Caesarstone RETAIL PRICE as posted on the Caesarstone website and updated from time to time” amongst other provisos. In return for this, Sangengalo Marble & Granite would be included in their “Caesarstone Accredited Fabricator” programme. This would provide them with a significant discount on Caesarstone products, ensure project and residential leads are provided to them, together with other benefits. A portion of the funding for Caesarstone’s recent advertising campaign is sourced by a “once-off entry fee” to those signing up to the “Caesarstone Accredited Fabricator” programme.

Complaint:

Sangengalo Marble & Granite is of the conviction that the contract offered to them and to “a small number of eligible Caesarstone fabricators in each region” by International Slab Sales (Pty) Ltd and Caesarstone South Africa prevents fair offering of economic and effective alternatives to the South African market in an impartial manner. At the same time, they feel that Caesarstone’s newly launched marketing and advertising campaign (print, TV and on social media) is misleading in terms of the advertised “Caesarstone Accredited Fabricator” programme. The reference to “Caesarstone Accredited Fabricators” in their advertising states that:

“From 1 August 2017 Caesarstone South Africa will be implementing an Accredited Fabricators Program. This means that you can now enjoy Caesarstone in your home with peace of mind knowing that it has been installed by adhering to the highest standards of technical workmanship.

As the leading quartz surface brand, we expect only the best fabrication and installation, to guarantee the Caesarstone reputation and promise of longevity. When you use an Accredited Fabricator you will be eligible to receive our Lifetime Warranty and added customer benefits, which we pride ourselves in.

A Caesarstone Accredited Fabricator is approved by Caesarstone, because we believe in providing the best service, highest quality product and supreme workmanship to you.”

(http://www.caesarstone.co.za/customer-service/accredited-fabricators/)

While excellent service, highest quality product and quality workmanship are obviously foundational to any company, the reality is that when one reads the “Caesarstone Accredited Fabricator” contract – it is primarily about protecting their market share by ensuring fabricators do not import their own engineered stone, enforcing adherence to recommended Caesarstone Retail Prices, and promoting exclusive loyalty to the Caesarstone brand. This is in return for commercial benefit. Sangengalo Marble & Granite will take this up with the Advertising Complaints Commission.

After seeking legal opinion on the “Caesarstone Accredited Fabricator” programme, Sangengalo Marble & Granite filed an official complaint with the Competition Commission South Africa on 25 October 2017 and have received an acknowledgement of receipt with Case Number: 2017Oct0057. As one of the market leaders in the marble, granite and engineered stone industry in South Africa, Sangengalo Marble & Granite believes this anti-competitive behaviour by an established brand was instituted to the exclusive benefit of (1) Caesarstone SA and International Slab Sales (Pty) Ltd and (2) to the benefit of the group of fabricators in Gauteng, KZN, and the Western Cape who have already signed up to the programme.

Conclusion:

Sangengalo Marble & Granite’s complaint is about anti-competitive conduct proscribed by the Competition Act (Act). The Act prohibits practices that may eliminate competition in any market within South Africa’s economy and it also forbids abuse of dominance by business entities. The Act, through the enforcement of these prohibitions, encourages and promotes competition in markets for the benefit of consumers of goods and services.

Issued by: Sangengalo Kitchen Enterprises CC, trading as Sangengalo Marble & Granite.

Contact:

Mr Neville Owen
Founder & CEO of Sangengalo Marble & Granite
E. neville@ske.co.za
T. 021-907-1680