Competition law generally classifies relationships between firms as vertical (supplier and customer) or horizontal (competitors or potential competitors). The nature of the relationship has important implications for how the law applies.
Continue Reading Navigating Competition Law Compliance in Dual Distribution Relationships – Recent Case Law and Lessons from Europe
The recent decision of the Constitutional Court in Competition Commission of South Africa v Pickford Removals SA (Pty) Limited may have a material effect on the future prosecution of prohibited practices – including cartel behavior and abuses of dominance.
The Pickford decision relates to the interpretation of section 67(1) of the South African Competition Act as it stood before it was amended by the Competition Amendment Act, 2018. The section said:
“…a complaint in respect of a prohibited practice may not be initiated more than three years after the practice has ceased”
The main finding of the Constitutional Court was that section 67(1) of the Competition Act does not constitute a prescription provision, but a procedural time-bar provision, which in the event of non-compliance can be condoned. The effect is essentially that a prohibited practice complaint does not necessarily lapse three years after a prohibited practice has ceased.
In its finding, the Constitutional Court set aside an order of the Competition Appeal Court (CAC) and the matter was remitted to the Competition Tribunal (Tribunal) for further hearing.
Continue Reading Widening the net – the Constitutional Court’s softening of the time-bar defence under South African competition law
Earlier this month, the South African Competition Tribunal found a firm guilty of abusing its dominance. The firm was a small trader with a market share of 4.7%. The illegal conduct comprised excessive pricing of face masks for a period of just over one month. The investigation, prosecution and adjudication took less than three months.
On 13 February 2020, the Minister of Trade, Industry and Competition (South Africa) brought the long-awaited buyer-power and price discrimination provisions into effect. These provisions were introduced through a suite of amendments made to the Competition Act (the “Act”) in early 2019. They may be summarized as follows:
In the recent case of Computicket v the Competition Commission, the Competition Appeal Court was called upon to analyse and explain the standard that must be met to establish an exclusionary abuse of dominance under South Africa’s Competition Act. The case provides insight into important practical and policy questions – what do we mean
This article considers the potential for changes in the treatment of vertical agreements under South African competition law as a result of recent amendments to the Competition Act, as well as current policy views within the law-makers and regulators.
Section 5(1) of the South African Competition Act prohibits vertical agreements that substantially prevent or lessen
One might think that competition law would applaud a firm that submits an independent and competitive bid, in response to a tender aimed at lowering prices. Recent experience in South Africa suggests that this is not always the case, and that such a firm may face investigation by the competition authorities precisely because it won the competitive tender.
In October 2017, the South African Competition Commission announced that it has initiated, and is investigating, a complaint of abuse of dominance by Vodacom, the country’s largest cellular network services provider.
The subject of the complaint is a four year exclusive contract, in terms of which Vodacom will supply mobile telecommunications services to 20 government departments.
Although Vodacom bid for the contract in a competitive tender process, the Commission “is of the view” that the contract will (1) further entrench Vodacom’s dominant position in the relevant market; (2) raise barriers to entry and expansion in the relevant market; (3) distort competition in the market; and (4) result in a loss of market share for other network operators.
Leaving aside the merits of the complaint, the announcement is interesting and controversial for a number of reasons. In particular, it raises important questions about the Commission’s advocacy strategy, and about the obligations on business when participating in significant tenders.Continue Reading South Africa: When a competitive bid is not enough
(The full version of this bulletin was originally published on Fasken.com – “The Competition Commission’s Market Inquiry into Data Services” – September 12th, 2017.)
On 18 September 2017, the Competition Commission is expected to commence a market inquiry into data services in South Africa. This is the sixth market inquiry to
On 7 June 2017 the Competition Commission South Africa will commence a market inquiry into the public passenger transport sector. This is the fifth market inquiry to be initiated by the Commission, following inquiries into the LPG, healthcare, grocery retail and banking sectors.
In terms of the Terms
On 17 June 2015, the Competition Appeal Court of South Africa (CAC) overturned the Competition Tribunal’s decision which found Sasol Chemical Industries Limited (Sasol) guilty of excessive pricing.
The CAC’s judgment is thorough and the factual, legal, accounting and economic issues covered are complicated. Although redeeming for Sasol, the judgment may give rise to a number of significant implications for future enforcement action against excessive pricing South Africa.
We set out below a review of the questions raised in the decision as well as the potential implications of the CAC’s answers.
The feedstock debate – Actual costs or notional costs?1
The first and potentially most important question addressed by the CAC related to what the CAC referred to as the ‘feedstock debate’. According to the Competition Act2 , a price charged by a dominant firm is excessive and illegal if it has no reasonable relation to the economic value of the product in question.
In conditions of competition, prices will normally be driven down towards a firm’s costs of production (plus a reasonable return). A firm’s costs (including a reasonable return) therefore usually provide an insightful proxy for the price that would prevail under conditions of competition, and therefore a product’s ‘economic value’.
In the only previous excessive pricing case in South Africa, the Mittal case, the CAC held:
…economic value is a notional objective market standard, not one derived from circumstances peculiar to the particular firm… The criterion of economic value…recognizes only the costs that would be recovered in long run competitive equilibrium3.
Sasol has a peculiar cost advantage because it procures its feedstock propylene from its sister company – Sasol Synfuels – at a low internal transfer price. Feedstock propylene is a critical input in the production of purified propylene, which is then converted into polypropylene.
One of the key questions in the Sasol case was how
Continue Reading The Sasol appeal – developing or dismissing excessive pricing law in South Africa?
