South Africa
Answer ... The Competition Act (89/1998), as amended, includes a number of provisions that regulate abuses by dominant firms. In order for these provisions to apply, the Competition Act must be applicable in terms of Section 3(1), which stipulates that “the Competition Act applies to all economic activity within or having an effect within the Republic of South Africa”.
Section 7 sets out the legal requirements on when a firm will be considered to be dominant; Sections 8 and 9 specify the conduct that a dominant firm may not engage in.
South Africa
Answer ... The Competition Act applies to all economic activity within, or having an effect within, South Africa, except:
- collective bargaining within the meaning of Section 23 of the Constitution and the Labour Relations Act (66/1995);
- a ‘collective agreement’, as defined in Section 213 of the Labour Relations Act, 1995; and
- concerted conduct designed to achieve a non-commercial socio-economic objective or similar purpose.
Insofar as the Competition Act applies to an industry or sector that is subject to the jurisdiction of another regulatory authority which has jurisdiction in respect of conduct regulated in terms of Chapter 2 (prohibited practices) of the Competition Act, the Competition Act must be construed as establishing concurrent jurisdiction in respect of that conduct. The manner in which the concurrent jurisdiction is exercised in terms of the act and any other public regulation must be managed in accordance with any applicable agreement, such as a memorandum of understanding.
South Africa
Answer ... The purpose of the Competition Act is to promote and maintain competition in South Africa in order to:
- promote the efficiency, adaptability and development of the economy;
- provide consumers with competitive prices and product choices;
- promote employment and advance the social and economic welfare of South Africans;
- expand opportunities for South African participation in world markets and recognise the role of foreign competition in South Africa;
- ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy; and
- promote a greater spread of ownership – in particular, to increase the ownership stakes of firms controlled or owned by historically disadvantaged persons.
South Africa
Answer ... The authorities mandated to enforce the Competition Act are:
- the Competition Commission;
- the Competition Tribunal; and
- the Competition Appeal Court (CAC).
The commission is the investigating and prosecuting agency; while the tribunal is the court. Should the commission, through its investigation, determine that a contravention has occurred, it will refer the complaint to the tribunal for adjudication. The tribunal is empowered to decide on whether a contravention of the Competition Act has occurred and impose a penalty or other appropriate remedy. In turn, the CAC hears appeals against decisions of the tribunal. Although these bodies function independently of each other and of the state, the commission and the tribunal are administratively accountable to the Department of Trade, Industry and Competition; while the CAC is part of the judiciary.
South Africa
Answer ... Competition Commission of South Africa v Media 24, the first predatory pricing matter to be litigated, dealt with the question of whether pricing below average total cost may be predatory. The CAC found that the average total cost threshold is inappropriate and a subjective intention is irrelevant to a determination under Section 8(c). Given that Media 24 had priced above average avoidable cost, the CAC found that it had not engaged in prohibited predatory pricing. Since the Constitutional Court dismissed the commission’s appeal, the CAC’s decision stands.
In Computicket (Pty) Limited v Competition Commission, the CAC dismissed Computicket’s appeal against a decision of the tribunal which found that Computicket had engaged in abuse of dominance conduct in contravention of Section 8(d)(i) by excluding rivals through exclusive arrangements with customers or suppliers. The CAC reaffirmed that in order to establish anti-competitive effects for the purposes of Section 8, a complaint must establish that:
- the exclusionary conduct resulted in actual harm to consumer welfare; or
- the exclusionary conduct was substantial or significant in terms of its effects in foreclosing the market to competitors.
In addition, the CAC confirmed that foreclosure of competitors need not be actual foreclosure; potential foreclosure will suffice.
In March 2020, the Department of Trade, Industry and Competition published ‘anti-price gouging regulations’ which have applied to a prescribed list of essential goods in line with the Disaster Management Act throughout the COVID-19 pandemic. As a result, firms supplying these essential goods are prohibited from implementing a price increase which is not directly proportional to an underlying cost increase. A non-justified increase will be considered ‘excessive’ for the purposes of Section 8(1)(a) of the Competition Act. In addition, the tribunal published a directive to facilitate urgent and expedited hearings of matters arising from the regulations.
In November 2020, the CAC handed down a judgment in Babelegi Workwear and Industrial Supplies CC v Competition Commission that could significantly affect how abuse of dominance cases are prosecuted. The decision is the first-ever finding by the CAC of excessive pricing and the matter was the first excessive pricing case following the amendment of the Competition Act in 2020. The judgment could mean that small firms (Babelegi enjoyed less than a 5% share of the national market) that may not otherwise have been regarded as dominant outside of a disaster period may be found to have market power due to their ability to raise prices.