BCX, Dischem at war over software

Vexall, an ICT company that started trading in September 2019, is seeking interim relief against Business Connexion (BCX), who owns the copyright to the computer program called Unisolv. BCX developed Unisolv some 26 years ago. It is said to be the industry-standard software for use by private retail pharmacies.

In 2019, some BCX staff members involved in developing and implementing Unisolv resigned and joined Vexall, in which Dis-Chem is a majority 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. These comprise a wide-range of ICT services such as hardware and software installation, central patient profile hosting and inventory management services, among others.

BCX says 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 does not object to Vexall providing non-integral services. Vexall, in turn, argues that it should be able to provide all “value added services”.

BCX lodged a case in the High Court in October 2019 against Vexall, Dis-Chem and 46 others (former BCX employees who are now with Vexall).

BCX’s allegations – that Vexall has acted unlawfully against BCX by illegally poaching its employees, customers and unlawfully appropriating its intellectual property in relation to Unisolv – are the subject of the case lodged in the High Court.

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

In summary, Vexall accuses BCX of being a dominant company and of “tying and bundling” i.e. forcing its customers to purchase “value added services” together with the licence in order to use the Unisolv software. It argues that this induces customers not to deal with Vexall.

The Competition Act prohibits a dominant company from selling goods or services on condition that the buyer must purchase unrelated goods or services (unless the dominant company can show pro-competitive effects which outweigh the anti-competitive effect of its conduct).

BCX denies that it is a dominant company. It also denies that it has acted anti-competitively (“tying and bundling”). In its papers before the Tribunal, it also submits that the matter before the Tribunal should be put on hold, pending the outcome of the case in the High Court.

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