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ARTICLE · 06 JUNE 2006

Are Restraints of Trade Anti-Competitive?

Cliffe Dekker Hofmeyr
Cliffe Dekker Hofmeyr
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A recent interim relief order of the Competition Tribunal has raised concerns in relation to restraints of trade. The order was given in the context of a 10 year restraint given by Nedschroef in favour of Teamcor and CBC Fasteners.

South AfricaAntitrust/Competition Law
Natalie Browne
Natalie Browne

A recent interim relief order of the Competition Tribunal has raised concerns in relation to restraints of trade. The order was given in the context of a 10 year restraint given by Nedschroef in favour of Teamcor and CBC Fasteners. The Tribunal ruled that the restraint appeared to have the effect of dividing markets among competitors. Market division is per se prohibited under the Competition Act, meaning that it cannot be justified on the basis of efficiency or other pro-competitive gains.

In 2000, Nedschroef purchased certain machinery used for manufacturing fasteners from Teamcor. Since then, Nedschroef has been a manufacturer and distributor of fasteners used in the automotive industry. When Nedschroef concluded the agreement of sale with Teamcor, Nedschroef undertook to restrain itself for a period of 10 years to manufacturing only certain types of fasteners listed in an annexure to the sale agreement. In return, Teamcor undertook to refrain, for the same period, from

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