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:
- the price discrimination provisions prohibit dominant sellers
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.
(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.
What does the Commission intend to investigate?
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?
The year of 2014 marked the 15 year anniversary of the South African Competition Authorities. The year’s highlights included some important merger decisions, implementation of the Competition Commission’s powers in relation to market inquiries, development of the law prohibiting excessive pricing, the appointment of a new Commissioner and important clarification of regional merger control laws…
This note summarizes the recent decision of the South African Competition Tribunal, which found Sasol Chemical Industries guilty of excessive pricing.
South Africa is one of the few competition law jurisdictions that actively pursues cases of ‘excessive pricing’ by dominant firms. The Competition Commission had alleged that Sasol had charged domestic customers excessive prices…