Claims of ‘intimidation, veiled threats’ as Pepkor, Tekkie Town row intensifies

The logo for Mr Tekkie (Picture: Supplied)
The logo for Mr Tekkie (Picture: Supplied)

The Battle between Pepkor and former Tekkie Town execs heats up amid allegations of intimidation.

Bernard Mostert, former CEO of Tekkie Town and currently part of a group planning to launch Mr Tekkie in South Africa, told Fin24 on Friday that he was surprised to be dropped as a guest speaker at a SA Consumer Finance conference hosted by Citi in Cape Town on Thursday.

He was set to speak on the topic "Before and After Steinhoff — An Entrepreneur's Story".

According to Mostert, he was informed by the organisers that Pepkor's lawyers had threatened it with legal action should he (Mostert) be allowed to speak.

Pepkor in turn told Fin24 on Friday that it "denies in the strongest terms" that it asked Citi to cancel Mostert’s speaking engagement at the conference.

Mostert claimed that Pepkor has resorted to a strategy of "intimidation and veiled threats" to prevent Mr Tekkie from entering the market. He said several of Mr Tekkie’s suppliers and landlords have received letters from Pepkor cautioning the suppliers and owners of shopping centres about dealing with or interacting with Mr Tekkie.

"These letters create the impression of successful legal action regarding restraints of trade against Mr Tekkie founders. We view this behaviour as uncompetitive and will refer it to the Competition Commission. We will also challenge it legally," said Mostert.

Pepkor told Fin24 on Friday that it did inform its suppliers that it has initiated legal proceedings to enforce restraint of trade provisions in place with the previous management of Tekkie Town, who are now involved with Mr Tekkie.

In a letter from Pepkor to suppliers that Fin24 has seen, Pepkor CEO Leon Lourens writes: "I am sure that by now you would have been contacted by the new 'Mr Tekkie' team to supply them. As a current business partner of your company I have an obligation and duty to inform you that we have commenced a court process to enforce restraint of trade provisions against them. This could affect potential dealings that you might have with them."

'Steinhoff victims'

The then partners in Tekkie Town sold it to Steinhoff in 2016 and it currently forms part of Steinhoff's subsidiary Pepkor.

The former Tekkie Town partners are challenging the Steinhoff transaction since the latter acknowledged accounting irregularities in its financial reports. These reports had formed the basis of the disposal of Tekkie Town to Steinhoff, according to the former Tekkie Town partners.

The collapse of Steinhoff in December saw it lose more than R250bn in value. Tekkie Town, therefore, landed up with Pepkor under "controversial circumstances", in the view of Mostert.

He was part of the group of former Tekkie Town employees who resigned from Pepkor’s employment in June due to what they claim was "a conflict in values, ethics and approaches in doing business".

This week Pepkor brought two applications in the Western Cape High Court relating to the former Tekkie Town executives' intentions to start the new chain called Mr Tekkie.

Earlier this week Pepkor applied for an urgent court order to enforce restraint of trade provisions against the former Tekkie Town executives, including Tekkie Town founder Braam van Huyssteen and Mostert.
Pepkor wants the high court to confirm that Mr Tekkie may not compete with its (Pepkor's) Tekkie Town business. Pepkor decided to take legal action to "confront aggressive attempts" by start-up retailer Mr Tekkie and its founders to "unlawfully" compete with Pepkor’s Tekkie Town shoe chain.

The second court application brought by Pepkor is an attempt to interdict the former Tekkie Town executives from using the Mr Tekkie name, proposed branding or trademarks.

Mr Tekkie

In mid-August Mr Tekkie announced that the first stores of its apparel and footwear retail chain would open in most major cities and towns across South Africa in November 2018. The new chain was conceived by Van Huyssteen and his management team that launched Tekkie Town in 1989. Van Huyssteen is backing the Mr Tekkie venture with an investment of R500m.

The plan is to manage Mr Tekkie from its headquarters in George once attempts to evict Pepkor from the building, privately owned by Van Huyssteen, has been concluded, according to the Mr Tekkie team.

Mostert told Fin24 on Friday that the Mr Tekkie team will oppose both Pepkor applications.

The Mr Tekkie founders said they obtained legal advice with regards to any restraint of trade or any other legal impediment before they decided to invest the more than R500m into the new business.

Mr Tekkie will be positioned as an omni-channel retailer to supply branded apparel and footwear nationwide.

"Like many South Africans we could be classified as 'Steinhoff victims' and we could have elected not to do anything other than focus on our various legal battles to have our ownership in Tekkie Town restored," said Mostert.

"We will fight for its (Mr Tekkie's) right to exist and its opportunity to deliver a unique retail experience to South Africans, as well as our legal right to start a new business venture.”

According to Mostert, Pepkor alleges that the Mr Tekkie trademark has not been in use and, therefore, should be "extinguished".

"The truth of the matter is, however, that a Mr Tekkie store has been operating in the proximity of a Tekkie Town in a shopping centre in Cape Town since 2012," said Mostert.

"We bought the Mr Tekkie trademark from its original owner who registered it in 1999 - two years before the first Tekkie Town opened."

According to Pepkor CEO Leon Lourens, its supporting documents, including retrieved deleted emails, shows that "all the disruptions in respect of the Tekkie Town business over the last couple of months have been part of an orchestrated plan by the former executives".

Tekkie Town operates approximately 381 stores within Pepkor’s total retail footprint of more than 5 100 stores and continues to trade according to expectations. Riaan van Rooyen was recently appointed as new Tekkie Town managing director and 62 vacant positions were filled as well, according to Pepkor.

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