Squeezing out the small players

Activities of a company claiming to enforce copyright piracy laws appear designed to drive small competitors of the big film and video games distribution companies out of the market—infringing constitutional rights

And investigations show the company—the South African Federation Against Copyright Theft (Safact)—seems determined to achieve its objective by acting unlawfully, and infringing the constitutional rights of legitimate small importers of DVDs, CDs and video games.

A report by the Mail & Guardian three weeks ago implicated Safact—a Johannesburg organisation that claims it acts for a number of big-name United States film studios and companies such as Sony of Japan—in a number of fraudulent acts in its fight against piracy in Southern Africa.

Safact has on numerous occasions seized and confiscated merchandise from traders in ways that a number of courts and organisations, such as the Films and Publications Board, have found unlawful.

Some of Safact’s activities that have resulted in it losing a number of court cases include seizing goods without proper powers of attorney from copyright owners and using certain laws or acts inappropriately. Other alleged methods are under investigation.
Also, three of Safact’s enforcers are the subject of police investigations for a number of possible offences, including the alleged impersonation of police officers to enter restricted areas in airports.

In the past six months alone, according to estimates, government departments such as Safety and Security and Trade and Industry have lost almost R1-million in damages awards to small traders in cases where their officers have accompanied Safact on raids.

Inquiries reveal that Nu Metro and Ster Kinekor are foremost among local film and video games distribution companies that sponsor Safact.

Nu Metro managing director Herman Trollip, who also happens to be the chairperson of Safact, denies that Safact has done anything wrong, despite a number of allegations to the contrary.

“The fight against piracy is a very big one,” said Trollip in an M&G interview with him and Safact director Fred Potgieter. “So actually instead of trying to ‘victimise’ legitimate importers and distributors, you in the media should help in this fight.”

But according to small importers of DVDs, CDs and other video games devices, the real motives of the big distributors are to capture and maintain for themselves as much as they can of the local market—estimated by industry insiders to generate an annual turnover of more than R1-billion.

A policeman investigating Safact told the M&G that it is for this reason that Nu Metro and Ster Kinekor are prepared to go to any lengths, even using Safact’s dubious services.

Says Roelf van der Merwe, a Pretoria attorney who has represented a number of small businesses in litigation against Safact and who has won at least 15 cases: “The flow of the many cases involving small traders against Safact makes it inevitable to conclude that it [Safact] only has the intention of squeezing out small traders to favour their bosses, the big players.”

What Van der Merwe says is in line with the findings of a number of judges in many of the Safact/small trader courtroom battles.

Said Pretoria High Court Judge Gerrit L Grobler in a finding during a case in which two traders accused Safact of unfairly targeting their businesses: “In both applications, the point is made that Safact is directing its attention to small traders in its endeavours to safeguard its members against copyright infringements, whilst using the provisions of Subsection 26 (1) (a) and 26 (1) (c) of the Film and Publications Act as a tool to seize all their stock and to put them out of business.”

A senior official of the Films and Publications Board in Cape Town, who was interviewed by phone, said he was unhappy with the way Safact used the Act to seize and confiscate goods.

A former Safact enforcer, who spoke on condition of anonymity, also pointed out some discrepancies in the organisation’s activities: “What many don’t realise is that Safact won’t touch DVDs or games in stores like CNA, Pick ‘n Pay, Incredible Connection and others, precisely because those stores are supplied by Nu Metro and Ster Kinekor.”

One trader, Mackus Mocke from Roodeport, who says he has been the victim of unfair Safact raids since 2000, has another allegation to make: “Safact raids businesses like mine because we buy our goods directly from foreign suppliers. If we bought from their patrons Nu Metro or Ster Kinekor they would leave us in peace.”

Mocke says no court has ever found proof that his DVDs or video games were pirated. Like other traders the M&G has spoken to, he says another reason for the big film distributors’ campaign against small suppliers is that the latter’s merchandise is cheaper.

Inquiries to the Film and Publications Board about whether there are any laws prohibiting small traders from importing video games or any other such merchandise directly from overseas suppliers indicate that none exists.

The board, however, says the problem of piracy in South Africa is very real and quite big. “I am not sure of the exact figures lost to illegitimate traders through piracy, but I wouldn’t be surprised if the amount is in excess of R25-million a year,” says Iyavar Chetty, the board’s acting CEO.

He says piracy needs to be dealt with, but this must be done correctly.

“As long as Safact is serious about dealing with piracy at all levels, we shall be happy to cooperate with them. Not before,” Chetty says.

“If Safact is fighting piracy it should use the Copyright Act—which is the appropriate law—in its seizures, instead of the Film and Publications Act.”

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