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Double blow as BCX loses retail pharmacy court battle

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Telkom subsidiary BCX has lost a High Court battle against ICT company Vexall in a dispute over a computer program used by hundreds of retail pharmacies in the country to dispense medicine.

The High Court judgement means BCX has now suffered a double blow after the Competition Tribunal, in February, issued an order granting interim relief to Vexall against BCX in the dispute over the Unisolv program.

Vexall, an ICT company that started trading in September 2019, sought interim relief against BCX, which owns the copyright to Unisolv.

Vexall provides ICT support services to the healthcare industry, such as a pharmacy bureau and digital medical aid.

Pharmacy Dis-Chem has some shares in Vexall.

BCX developed Unisolv 26 years ago, and it is said to be the industry-standard software for use by private retail pharmacies.

Orchestrated resignations

According to the Tribunal, in 2019, some BCX staff members involved in developing and implementing Unisolv resigned and joined Vexall.

BCX claimed the resignations were orchestrated, while Vexall said the workers were either retrenched as part of a substantial cost-cutting exercise, or resigned seeking job security.

The Telkom subsidiary alleged in the High Court that Vexall acted unlawfully against BCX by illegally poaching its employees and customers, and unlawfully appropriating its intellectual property in relation to Unisolv.

Vexall also lodged a complaint against BCX with the Competition Commission, accusing BCX of uncompetitive behaviour and contravening the Competition Act.

In its ruling, the Competition Tribunal said BCX is prohibited from selling or offering a Unisolv licence on condition that a customer purchase value-added services from BCX.

BCX was also ordered to pay Vexall’s costs of the application.

Following the latest ruling, Vexall says in a statement that on 22 May, the High Court of SA dismissed, with costs, an application brought by BCX against Vexall and 47 other respondents, most of which are Vexall employees.

“In its application, stripped of its emotive and strong language, BCX sought interdictory relief on allegations of collusion, solicitation, spring-boarding and the use of confidential information against Vexall and most of its employees, in addition to the enforcement of restraint of trade provisions against some of the Vexall employees.”

Vexall notes the matter was enrolled for hearing on 29 and 30 April; however, due to the prevailing COVID-19 pandemic and the national lockdown regulations, the parties argued the matter virtually on the two allocated dates.

According to Vexall, the High Court found no evidence of any unlawful conduct on the part of Vexall or any of its employees and “as a matter of fact, in its findings, it makes numerous references to ‘uncalled for’ and ‘unjustified’ actions against the respondents”.

“The finding by the High Court − coupled with the ground-breaking Competition Tribunal order on 12 February 2020 in favour of Vexall, on behalf of the retail pharmacy customers who utilise the BCX software product − is welcomed and celebrated by Vexall, its clients and alliance partners and central to the promotion of the rights of software users to elect their value-added service provider of choice.”

In a statement issued to ITWeb, BCX says it has noted the judgement passed down by the High Court on Thursday, 21 May, regarding the matter between Vexall and BCX.

“As would be expected, we are disappointed by this ruling. We are currently studying the judgement and taking advice on the implications and effect of this judgement. We will decide on further actions, if any, once we have received the advice requested,” says the company.

Value-added issue

It is alleged that in 2019, some BCX staff members involved in developing and implementing Unisolv resigned and joined Vexall, in which Dis-Chem is a shareholder.

In the second half of 2019, Dis-Chem and a substantial number of other pharmacies gave notice to BCX that they would no longer procure “value-added services” from the company.

The Competition Tribunal said these comprise a wide range of services such as hardware and software installation, central patient profile hosting and inventory management services, among others.

BCX said some of these services are integral to the functioning of Unisolv as a whole and it would not be viable to “unbundle” these.

However, it did not object to Vexall providing non-integral services. Vexall, in turn, argued it should be able to provide all “value-added services”.

Vexall accused BCX of being a dominant company and of “tying and bundling”; ie, forcing its customers to purchase “value-added services” together with the licence to use Unisolv.

Vexall argued this induces customers not to deal with Vexall. The company also wanted to provide “value-added services” to pharmacies using Unisolv.

BCX, however, denied it is a dominant company and refuted claims by Vexall that it had acted anti-competitively (tying and bundling).

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