Court of Appeal Upholds Suspension of Petroleum Retail License: A Major Victory for Established Outlets

Pietermaritzburg, South Africa – [22 April 2024] – In a recent ruling by the Court of Appeal, the court has upheld the suspension of retail licences issued by the Controller of Petroleum Products following an appeal by several established petroleum retailers. The decision has significant implications for the petroleum retail industry in the Matatiele area, as it puts a halt to the development of new retail sites pending the outcome of the appeal process.

In a landmark judgement, the court found that the appellants, a group of established petroleum retailers, had successfully demonstrated that the issuance of new site and retail licences would directly and adversely affect their commercial interests. The retailers argued that the Controller’s decision to grant new licences would lead to a redistribution of sales, negatively impacting the existing outlets’ revenue and leading to potential job losses.

The appellants supported their case with a comprehensive report by FTI Consulting, a respected consulting firm, which highlighted the lack of market demand for an additional petroleum retail site in the Matatiele area. The report cited declining fuel sales and an oversaturation of retail outlets as primary concerns, indicating that the new site would likely cannibalise sales from existing outlets.

The court’s decision aligns with a previous ruling by the Minister of Energy in May 2020, which rejected similar applications for retail licences in the Matatiele area due to the expected negative impact on existing retailers. The appellants contended that the current market conditions had not improved, further strengthening their case against the Controller’s decision.

With this ruling, the appeal process now proceeds, with the Controller’s initial decision suspended. This means that the new retail site cannot proceed with development until the Minister has ruled on the appeal. The court also referred the application for an interim interdict back to the high court for consideration, allowing both parties to present additional evidence on the current factual situation at the proposed new retail site.

Legal experts believe this decision underscores the importance of thorough market analysis before granting new petroleum retail licences. The court’s ruling sends a strong message that commercial interests and market stability must be carefully considered to avoid detrimental impacts on established businesses and employment.

The appellants expressed satisfaction with the ruling, stating that it affirms the validity of their concerns and the need for a balanced approach to petroleum retail development. They look forward to presenting their case to the Minister and remain confident that their appeal will be successful.

The respondents, whose retail licences are now suspended, have yet to comment on the court’s decision. They are expected to present their case to the high court during the forthcoming consideration of the interim interdict.

As this case unfolds, stakeholders in the petroleum retail industry are closely monitoring developments, recognising the broader implications for licencing practices and market dynamics in the sector.

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