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BCX loses first round in retail pharmacy software fight

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The Competition Tribunal this morning issued an order granting interim relief to Vexall against BCX in the dispute over a computer program used by hundreds of retail pharmacies in the country to dispense medicine.

The warring parties – which are currently involved in a High Court dispute over the program – earlier this month appeared before the Competition Tribunal in an application for interim relief.

Vexall, an ICT company that started trading in September 2019, was seeking interim relief against Telkom subsidiary BCX, which owns the copyright to the computer program called Unisolv.

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

Pharmacy Dis-Chem has some shares in Vexell.

The Competition Commission says BCX developed Unisolv 26 years ago. It is said to be the industry-standard software for use by private retail pharmacies.

In a statement issued today, the tribunal has ordered that:

1) BCX is prohibited from selling or offering a Unisolv licence on condition that a customer purchase value-added services from BCX;

2) This will remain in force for six months; and

3) BCX is to pay Vexall’s costs of the application.

The tribunal says it will issue reasons for its decision in due course.

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

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

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 tribunal says 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 that it should be able to provide all “value-added services”.

In October 2019, Vexall lodged a complaint against BCX with the Competition Commission, which investigates and prosecutes companies for alleged anti-competitive behaviour.

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 that this induces customers not to deal with it (Vexall). The company also wants 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).

Pending the outcome of the commission’s investigation, Vexall then approached the tribunal for interim relief on 3 February.

The tribunal is the court of first instance in competition law cases and adjudicates on such matters.

It asked the tribunal to prohibit BCX from:

1) Inducing Vexall’s customers not to deal with it by making the licensing of the Unisolv software (including the right to receive updates, upgrades and new releases of the software) conditional upon those customers also procuring value-added services from BCX (these range from updates and support services to training and consulting services); and

2) Licensing the Unisolv software on condition that the licensee purchases value-added services from BCX.

The tribunal has granted only the one remedy sought by Vexall.

The interim relief application heard in the tribunal is separate from the High Court matter which BCX lodged against Vexall and others in October 2019.

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