South Africa: Fake goods steal billions

The increase in counterfeit goods on the black market has the potential to destroy the local economy and could lead to more unemployment, according to experts.

This follows an announcement by the Gauteng provincial government that counterfeit goods worth R5 billion were seized in Gauteng alone last year.

Paul Ramara, a partner at Spoor & Fisher, who specialises in trade mark litigation and anti-counterfeiting, said counterfeiting affects our economy as it leads to loss of customs duties, value added tax and the normal tax that would have been paid on the goods.

“This has an impact on the economy in the sense that the duties and taxes which would have been collected and used for socio-economic programmes is lost,” said Ramara.

He said counterfeiting also had an impact on employment because intellectual property rights (IPR) holders cannot compete with prices offered by counterfeiters for goods bearing the IPR holder’s trade mark.

“At the same time, IPR holders spend huge amounts of money only for the counterfeiter to ride on the back of their success.

“If IPR holders don’t get a return on investment, they will close down, which will lead to more unemployment,” said Ramara.

Gauteng Premier David Makhura said in the past 12 months alone, the South African Police Service (Saps) and the South African Revenue Service (Sars) had seized counterfeit goods in Gauteng worth R5 billion.

According to Sars, the total value of all goods confiscated between 1 April 2018 and 31 March 2019 amounted to R3 694 742 928 in 6 828 busts, or an increase of 1 988 from the previous 4 840.

Saps provincial spokesperson Brigadier Mathapelo Peters said the Saps in Gauteng worked closely with representatives of brand owners where search warrants had been obtained and large consignments of counterfeit goods confiscated in different crime prevention operations throughout the province.

“A variety of goods have been seized like clothing, footwear, watches, spices, liquor and cigarettes,” she said.

Peters said in a number of instances, police had also confiscated equipment believed to be used in the manufacturing of these counterfeit goods such as stencils and plates bearing brand logos.

According Tevin Jones, a candidate attorney who specialises in trade mark enforcement, the eradication of counterfeit goods is essential to the economy because it could lead to losses in sales and profits which could end up in job retrenchments.

“Also, the existence of counterfeit goods in the market may pose a health risk as the pharmaceutical, medicinal and food industries are increasingly being targeted by counterfeiters who deal in inferior, and in some instances toxic counterfeit goods,” he said.

This article was first published in The Citizen.

Date published: 30 January 2020
Author: Spoor & Fisher

Tags: counterfeit