Restraints of trade and dominance in South Africa: overview

A Q&A guide to restraints of trade and dominance in South Africa.

The Q&A gives a succinct overview of restraints of trade, monopolies and abuses of market power in South Africa. In particular, it covers the regulatory authorities and the regulatory framework, the scope of rules, exemptions, exclusions, statutes of limitation, notification, investigations, penalties and enforcement, third party damages claims, EU law, joint ventures and proposals for reform.

For information on merger control, regulatory framework and regulatory authorities, relevant triggering events and thresholds in South Africa, visit Merger control in South Africa: overview.

This Q&A is part of the global guide to competition and cartel leniency. For a full list of jurisdictional Restraints of Trade and Dominance Q&As visit www.practicallaw.com/restraintsoftrade-guide. For a full list of jurisdictional Merger Control Q&As visit www.practicallaw.com/mergercontrol-guide.

For a full list of jurisdictional Cartel Leniency Q&As, which provide a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities in multiple jurisdictions, visit www.practicallaw.com/leniency-guide.

Heather Irvine, Norton Rose Fulbright South Africa
Contents

Heather Irvine

 

Norton Rose Fulbright South Africa

 

Restraints of trade

Scope of rules

1. Are restrictive agreements and practices regulated? If so, what are the substantive provisions and regulatory authority?

Regulatory framework

Restrictive agreements and practices are regulated by the Competition Act 1998.

The Competition Act regulates both horizontal (practices between competitors) and vertical practices (practices between customers and suppliers).

Horizontal practices. The Competition Act prohibits any agreement, arrangement, understanding or concerted practice between competitors which has the effect of substantially preventing or lessening competition in any market in South Africa, unless the parties to the agreement can show that there are pro-competitive, technological or efficiency gains resulting from such conduct that outweighs any anti-competitive effect.

Such conduct is measured according to the "rule of reason" test which involves a weighing up of the anti-competitive effects against the pro-competitive or efficiency advantages of the conduct. An example of such an arrangement is a joint venture agreement between two competitors that results in the competitors working together and sharing information, which may have an anti-competitive effect but which also results in technological advancements and efficiencies. See below in relation to commercially sensitive information.

However, the Competition Act also prescribes certain outright or "per se" prohibitions. This includes any agreement, arrangement, understanding or concerted practice between competitors which involves:

  • Directly or indirectly fixing a purchase or selling price or any other trading condition (price fixing).

  • Dividing markets by allocating customers, suppliers, territories, or specific types of goods or services (market allocation).

  • Collusive tendering (bid-ridding).

These practices cannot be justified on any basis. Merely reaching an agreement, arrangement or understanding or any practice with a competitor to this effect is a contravention of the Competition Act.

The exchange of commercially sensitive information between competitors or potential competitors is also regarded by the competition authorities as problematic because it can be used to facilitate or encourage collusive agreements and behaviour between competitors. The exchange of commercially sensitive information between competitors is not explicitly prohibited in the Competition Act, but can be categorised under the rule of reason or per se prohibitions.

Vertical practices. The Competition Act prohibits any agreements between parties in a vertical relationship that have the effect of substantially preventing or lessening competition in a market in South Africa, unless a party to the agreement can show that the agreement results in technological, efficiency or other pro-competitive gains which outweigh the anti-competitive effect. As with horizontal practices, such conduct is measured according to the rule of reason test.

Examples of such agreements include long-term and exclusive agreements between a supplier and a customer under which the supplier will exclusively supply the customer with certain products for an extended period of time. Such an agreement may have the effect of excluding the supplier's competitors from the relevant market. However, the parties may be able to justify such exclusivity based on the efficiency that is achieved by having a long-term exclusive agreement in place.

The Competition Act also prohibits the practice of minimum resale price maintenance. This is a per se prohibition and cannot be justified on any basis. However, a supplier or producer can recommend a minimum resale price to the reseller of a good or service if:

  • The supplier or producer makes it clear to the reseller that the recommendation is not binding.

  • The words "recommended price" appear next to the stated price.

Maximum resale price maintenance is not prohibited outright by the Competition Act, but the competition authorities will examine it very closely to make sure it is not actually a disguised case of minimum resale price maintenance or price fixing.

The Competition Act also deals with restrictive practices by dominant firms.

Regulatory authority

The South African Competition Commission is responsible for enforcing the provisions of the Competition Act. The Competition Commission acts as the prosecuting body and is responsible for investigating and evaluating complaints. The Competition Tribunal is the adjudicating and decision-making body. If an investigation by the Competition Commission reveals that a firm has contravened the Competition Act, it refers the matter to the Competition Tribunal for a hearing. The Competition Tribunal, after hearing both parties, makes a final decision regarding the alleged contravention and the penalty or remedy to be imposed.

Decisions of the Competition Tribunal can be appealed to the Competition Appeal Court.

See box, The regulatory authorities.

 
2. Do the regulations only apply to formal agreements or can they apply to informal practices?

The Competition Act applies to formal and informal agreements, as well as any arrangements, understanding or practices that have the effect of substantially lessening or preventing competition and that can be categorised as a horizontal or vertical restrictive practice.

The wording in the Competition Act in relation to restrictive practices refers to "any agreement or concerted practice" that has an anti-competitive effect. A concerted practice is defined as "any co-operative or co-ordinated conduct between firms, achieved through direct or indirect contact, which replaces their independent action, but which does not amount to an agreement".

The Competition Act applies to formal agreements and any oral, informal or "gentlemen's" agreements.

Exemptions

3. Are there any exemptions? If so, what are the criteria for individual exemption and any applicable block exemptions?

The restrictions on horizontal and vertical practices make provision for conduct that might otherwise be classified as anti-competitive to be exempt from the Competition Act on the grounds that the efficiency, technological, or other pro-competitive advantages from such conduct outweigh the anti-competitive effects.

The Competition Act allows for three further types of exemption applications:

  • Application for exemption of a prohibited agreement or practice or category of prohibited agreements or practices (single or category exemption).

  • Application for exemption of a prohibited agreement or practice, or category of prohibited agreements or practices that relate to the exercise of intellectual property (IP) rights (IP exemption).

  • Application by professional associations for an exemption of their professional rules (professional rule exemption).

Single or category exemption. In considering this exemption, the Competition Commission assesses whether the conduct contributes to the objectives set out in section 10 of the Competition Act, which are:

  • Maintenance or promotion of exports. The typical situation where an exemption would be granted on this basis is in relation to an "export cartel". Competitors may be required to collaborate in export markets to enable them to be competitive in the global market. The Competition Commission has granted this type of exemption to airlines for their alliances and code-sharing agreements.

  • Promotion of the ability of small businesses, or firms controlled or owned by historically disadvantaged persons to become competitive. Small businesses include distinct entities, including co-operative enterprises and non-governmental organisations, managed by one owner or more. The Competition Act specifies that a "historically disadvantaged person" is an individual, association or juristic person controlled by individuals who were historically disadvantaged by unfair discrimination on the basis of race.

  • Change in productive capacity necessary to stop a decline in an industry. The term "productive capacity" is not defined in the Competition Act. The Competition Commission is likely to provide guidance to applicants regarding the factors to be considered in this regard.

  • Conduct required to ensure the economic stability of any industry designated by the Minister of Trade and Industry, after consulting the Minister responsible for that industry. To qualify for an exemption on this basis, the relevant industry must be designated by the Minister of Economic Development before the Competition Commission conducts an assessment of the application to establish whether an exemption is necessary.

IP exemptions. For IP exemptions, the Competition Commission will assess whether the conduct relates to the exercise of an IP right as set out in section 10(4) of the Competition Act. IP rights acquired or protected under the following acts are protected IP rights:

  • Performers' Protection Act 1967.

  • Plant Breeder's Rights Act 1976.

  • Patents Act 1978.

  • Copyright Act 1978.

  • Trade Marks Act 1993.

  • Designs Act 1993.

Professional rules exemptions. If the professional rules for which the exemption is sought contains a restriction that has the effect of substantially preventing or lessening competition in a market, the Competition Commission analyses whether those restrictions are reasonably required to maintain the professional standards or the ordinary function of the profession.

Exclusions and statutes of limitation

4. Are there any exclusions? Are there statutes of limitation associated with restrictive agreements and practices?

Exclusions

The Competition Act applies to all economic activity within or having an effect within South Africa. However, the following agreements are excluded:

  • Collective bargaining within the meaning of the Constitution and the Labour Relations Act 1995 (LRA).

  • Collective agreements, as defined in the LRA.

  • Concerted conduct designed to achieve a non-commercial socio-economic objective or similar purpose.

There are no de minimus provisions that exclude agreements based on the size or effect.

Statutes of limitation

Any complaint regarding a restrictive practice is subject to a three-year prescription period. The prescription period applies from the date that the practice in question ceased. If the conduct persists in any way, the prescription period can be suspended even in the event that the parties have terminated the agreement or arrangement.

Notification

5. What are the notification requirements for restrictive agreements and practices?

Notification

There is no mandatory requirement to notify restrictive agreements or practices. If firms are unsure as to whether an agreement or practice constitutes a contravention of the Competition Act, they can request the Competition Commission to provide an advisory opinion.

Informal guidance/opinion

Firms can approach the Competition Commission to provide an advisory opinion regarding an agreement or practice at a cost of ZAR2500. However, this opinion is not binding on the Competition Commission.

Responsibility for notification

There is no mandatory notification requirement. However, any person or firm can approach the Competition Commission for an advisory opinion.

Relevant authority

An advisory opinion can be requested from the Competition Commission. To the extent that the practice or agreement involves other sector regulators or government departments, it is advisable to obtain their input.

Form of notification

There is no prescribed form for notification. Parties that wish to obtain an advisory opinion must submit a letter to the Competition Commission outlining the facts of the matter in question and send it to the Competition Commission Registry by:

  • Fax: +27 12 394 0166.

  • Post: Private bag X23, Lynwood Ridge, 0040.

  • E-mail: ccsa@compcom.co.za.

Filing fee

The fee for an advisory opinion is ZAR2500. This must be paid by the party requesting the advisory opinion.

Investigations

6. Who can start an investigation into a restrictive agreement or practice?

Regulators

The Competition Commission can initiate an investigation into alleged restrictive practices:

  • On its own initiative.

  • On the basis of a complaint received from an individual, government entity or any other third party.

  • On the basis of market research and monitoring it conducts.

Third parties

Any person can submit information concerning an alleged restrictive practice to the Competition Commission, in any manner and form. The Competition Act also allows for any person to submit a complaint to the Competition Commission against another party based on an alleged prohibited practice.

There is no substantive difference between formal and informal complaints. For an informal complaint, the Competition Commission may be cited as the complainant in some instances. In a formal complaint, the party lodging the complaint is the complainant.

 
7. What rights (if any) does a complainant or other third party have to make representations, access documents or be heard during the course of an investigation?

Representations

During the investigatory stage of complaint proceedings, the Competition Commission requests various parties to provide information or documentation relevant to the investigation. The Competition Act does not deal specifically with third parties making representations during the investigatory stage, unless the Competition Commission has requested such representations. However, nothing prevents third parties from approaching the Competition Commission during the investigatory stage to provide information or documents.

Once the Competition Commission's investigation is completed and has revealed that the alleged conduct constitutes a contravention of the Competition Act, the Competition Commission refers the complaint to the Competition Tribunal for a hearing and final decision. If the Competition Commission does not believe that the conduct constitutes a contravention, it issues a non-referral notice. However, the complainant can self-refer the matter to the Competition Tribunal and step into the shoes of the Competition Commission in prosecuting the complaint.

The Competition Act provides that the following parties can participate in the hearing:

  • The Competition Commission.

  • The complainant, if the complainant referred the complaint to the Competition Tribunal or the Competition Tribunal, which is of the view that the complainant's interest is not adequately represented.

  • The respondent.

  • Any other person with a material interest in the hearing, unless the Competition Tribunal is of the view that such interest is adequately represented by another party to the hearing.

Third parties that wish to participate in the hearing must show a material interest in the matter before the Competition Tribunal. The Competition Tribunal Rules provide that any time after a matter is referred to the Competition Tribunal, any person with a material interest in the proceedings can apply to intervene in the proceedings by filing a notice (Form CT 6) which sets out a clear statement of the nature of the person's interest and the matters in respect of which they will make representations.

Document access

If a matter is before the Competition Tribunal, any person can request to inspect or copy any record of the Competition Tribunal's proceedings, subject to any claims of confidentiality or information being restricted.

Parties who have been recognised as participants in the hearing can request access to additional information necessary for the purposes of participating in the proceedings.

Be heard

Any parties recognised by the Competition Tribunal as participants in a hearing can make oral or written submissions to the Competition Tribunal. They can also put questions to the witnesses of the other parties to the hearing.

 
8. What are the stages of the investigation and timetable?

On initiating or receiving a complaint, the Competition Commission must direct an inspector to investigate the complaint as quickly as practicable. In practice, once the Competition Commission receives a complaint, it is referred to the Competition Commission's screening committee. This committee is responsible for screening complaints to confirm that they are not frivolous and vexatious.

If the Competition Commission decides to proceed, it formally initiates a complaint. If the Competition Commission initiates a complaint on its own initiative, it can refer the complaint to the Competition Tribunal at any time after initiating the complaint and there is no time limit on the duration of the Competition Commission's investigation. If the complaint was received from a third party complainant, the Competition Commission must refer the complaint to the Competition Tribunal within one year of receiving the complaint. This period can be extended by the Competition Commission with the consent of the complainant. If the one-year period after submission of the complaint has expired, and in the absence of consent by the complainant to extend the time period, the Competition Commission is deemed not to have referred the complaint. The complainant can then self-refer the matter to the Competition Tribunal.

Once the complaint has been referred to the Competition Tribunal, the respondent has 20 business days from receipt of the complaint referral to submit its answering affidavit setting out its preliminary response to the allegations contained in the complaint referral. The Competition Commission then has 15 business days after receipt of the respondent's answering affidavit to submit its replying affidavit. In the replying affidavit, the Competition Commission addresses any issues raised by the respondents in their answering affidavits.

After the replying affidavit is filed, pleadings close. A pre-hearing must then be scheduled to take place 20 business days after the Competition Commission has submitted its replying affidavit. At the pre-hearing, the parties and the Competition Tribunal decide on the time periods to be followed in relation to the remainder of the hearing, including dates for filing of discovery documents, factual and expert witness statements, heads of argument and oral hearings. Although the Competition Tribunal does its best to expedite matters, it is an unpredictable process and some complaints take several years to be concluded after the referral has been made to the Competition Tribunal.

Publicity and confidentiality

9. How much information is made publicly available concerning investigations into potentially restrictive agreements or practices? Is any information made automatically confidential and is confidentiality available on request?

Publicity

The Competition Commission generally issues a press release when it initiates a complaint. The press release describes the parties that are the subject of the Competition Commission's investigation, as well as the conduct that the parties are alleged to be involved in. The Competition Commission does not generally provide any further information publicly until it has made a decision on whether to refer the complaint. Once the Competition Commission has referred the complaint, it typically issues a press release to this effect.

The Competition Commission has also recently developed a practice of sending out weekly press statements indicating complaints it has received or initiated, and which complaints have been referred or not referred. High profile matters involving large well-known companies are also likely to be reported in the media. Hearings before the Competition Tribunal are open to the public and the media, and therefore matters before the Competition Tribunal are widely reported.

If a matter is before the Competition Tribunal, any person can request to inspect or copy any record of the Competition Tribunal's proceedings, subject to any claims of confidentiality or information being restricted.

Automatic confidentiality

Information that is confidential to the parties to the proceedings is not automatically kept confidential. However, certain information is classified as restricted. This includes:

  • The identity of the complainant if the complainant has requested the Competition Commission not to reveal their identity.

  • Information received by the Competition Commission during its investigation of the complaint (this is restricted until the Competition Commission refers the complaint).

  • The Competition Commission's internal documentation.

  • Information which, if disclosed, would prejudice the Competition Commission's processes.

Confidentiality on request

Any person can request when submitting information to the Competition Commission or Competition Tribunal that the information be kept confidential by submitting a confidentiality claim using form CC7. The form must be completed by describing the information, its owner, and the reasons why it should be kept confidential. The Competition Commission is bound by confidentiality claims but can refer these claims to the Competition Tribunal to determine whether or not the information is confidential.

 
10. What are the powers (if any) that the relevant regulator has to investigate potentially restrictive agreements or practices?

The Competition Commission has extensive powers when conducting investigations into potentially restrictive agreements or practices, including the power to:

  • Enter and search a firm's premises (referred to as a dawn raid) on the basis of a warrant obtained from the High Court.

  • Summon for interrogation any person who is believed to be able to furnish any information on the subject of the investigation.

  • Summon any person who is believed to have in its possession or control any information that has a bearing on the subject of the investigation to deliver or produce that information.

Settlements

11. Can the parties reach settlements with regulators to bring an early resolution to an investigation? If so, what are the circumstances for doing so and the applicable procedure?

Parties can enter into settlement agreements with the Competition Commission at any time after the Competition Commission has initiated an investigation into the alleged restrictive practice. The parties and the Competition Commission will agree on the penalty to be paid in respect of the contravention and will be requested to assist the Competition Commission in any further investigation into the conduct, as well as to comply with certain other obligations imposed by the Competition Commission. Such agreements must be confirmed by the Competition Tribunal.

 
12. Can the regulator accept remedies (commitments) from the parties to address competition concerns without reaching an infringement decision? If so, what are the circumstances for doing so and the applicable procedure?

It is unlikely that the Competition Commission would accept remedies or commitments from parties without the parties acknowledging that they have contravened the Competition Act. Previously, the Competition Commission was willing to enter into settlement agreements without parties having to admit to a contravention. However, more recently, the Competition Commission has taken the stance that no settlement agreements will be concluded without such an admission by the party to the settlement agreement.

The remedies and commitments offered can mitigate the penalty to be imposed as a result of the contravention, but do not exempt the parties from an admission.

Penalties and enforcement

13. What are the regulator's enforcement powers in relation to a prohibited restrictive agreement or practice?

Orders

The Competition Act provides that the Competition Tribunal can make an appropriate order in relation to a prohibited practice, including:

  • Forbidding any prohibited or restrictive practice.

  • Imposing an administrative penalty, with or without the addition of any other order.

  • Declaring the conduct of a firm to be a prohibited practice.

  • Declaring the whole or any part of an agreement to be void.

Fines

The Competition Tribunal can impose administrative fines of up to a maximum of 10% of the contravening party's annual turnover in, into or from South Africa in the preceding financial year.

Any person who fails to comply with an order of the Competition Tribunal is guilty of a criminal offence. Such an offence attracts a fine of up to SAR500,000 or imprisonment for up to ten years, or both.

If a party fails to pay the administrative penalty imposed by the Competition Tribunal, the Competition Commission can also institute proceedings in the High Court for the recovery.

Personal liability

The Competition Act does not currently allow for the personal liability of individual directors or managers. However, the Competition Amendment Act 2009, which was enacted in 2009 but is not yet in force (apart from certain provisions relating to market inquiries), will introduce personal liability for individual directors or managers.

Immunity/leniency

The Competition Commission has a very effective corporate leniency policy. A leniency applicant who is first to approach the Competition Commission, can potentially obtain immunity from prosecution for its participation in a cartel in exchange for providing information about the cartel and assisting in prosecuting the other members of the cartel.

Immunity in this context means that the Competition Commission will not subject the successful applicant to adjudication before the Competition Tribunal for its involvement in the cartel. In addition, the Commission will not impose any fines on a successful applicant.

Impact on agreements

The Competition Act provides that the Competition Tribunal can declare the whole or any part of a restrictive agreement void.

Third party damages claims and appeals

14. Can third parties claim damages for losses suffered as a result of a prohibited restrictive agreement or practice? If so, what special procedures or rules (if any) apply? Are collective/class actions possible?

Third party damages

The Competition Act gives the Competition Tribunal the power to award a complainant damages resulting from a restrictive agreement or practice if the Competition Tribunal has made an order to that effect. To the extent that a no-damages award was made by the Competition Tribunal, the complainant or any third party harmed by the agreement or practice in question can institute proceedings for damages in the civil courts on the basis of the Competition Tribunal's order.

Special procedures/rules

Actions for damages can be brought in any civil court, depending on the amount of damages being claimed.

A party instituting proceedings in the civil court for a contravention of the Competition Act must file with the registrar or clerk of the application court a notice from the chairperson of the Competition Tribunal or judge of the Competition Appeal Court:

  • Certifying that the conduct which is the basis of the claim was found to be a contravention of the Competition Act.

  • Setting out the applicable provision of the Competition Act and the date of the Competition Tribunal's or Competition Appeal Court's findings.

Such claims are subject to a three-year prescription period and cannot be brought more than three years after the final decision is made in respect of the conduct. The decision of the Competition Tribunal or the Competition Appeal Court is binding on the civil courts in so far as it relates to competition matters. The Competition Act provides that the notice issued by the chairperson of the Competition Tribunal or judge of the Competition Appeal Court is conclusive proof of the contravention and is binding on a civil court.

Collective/class actions

It is possible to institute collective or class actions on the basis of a contravention of the Competition Act. This area of law is still underdeveloped in South Africa and no class action has yet been successfully instituted on the basis of a restrictive agreement or practice.

 
15. Is there a right of appeal against any decision of the regulator? If so, which decisions, to which body and within which time limits? Are rights of appeal available to third parties, or only to the parties to the agreement or practice?

Rights of appeal and procedure

Decisions of the Competition Commission can be taken on appeal to the Competition Tribunal. The Competition Tribunal's decisions are appealable to the Competition Appeal Court.

A participant in a hearing before the Competition Tribunal can appeal against any decision of the Competition Tribunal, except for matters where the Competition Tribunal and Competition Appeal Court have concurrent jurisdiction.

Any person seeking to take a decision on appeal to the Competition Appeal Court must file a notice of appeal with the registrar of the Competition Appeal Court within 15 business days of receipt of the decision that is the subject of the appeal.

Third party rights of appeal

Third parties have the right to appeal the decisions of the Competition Tribunal to the extent that they were parties to the Competition Tribunal hearing in respect of the decision.

 

Monopolies and abuses of market power

Scope of rules

16. Are monopolies and abuses of market power regulated under administrative and/or criminal law? If so, what are the substantive provisions and regulatory authority?

Regulatory framework

Abuse of dominance by firms with market power is regulated by the Competition Act.

The Competition Act outright prohibits a dominant firm from charging an excessive price to the detriment of consumers or refusing to give a competitor access to an essential facility when it is economically feasible to do so.

The Competition Act also prohibits certain conduct to the extent that it constitutes an exclusionary act that results in an anti-competitive effect, if such effects cannot be outweighed by technological, efficiency or other pro-competitive gains resulting from such conduct. This is a general category of conduct that can include any conduct by a dominant firm which has an anti-competitive effect.

The Competition Act also prohibits specific types of exclusionary conducts. Such conduct is prohibited unless the firm concerned can show technological, efficiency or other pro-competitive gains which outweigh the anti-competitive effect of such conduct. This includes:

  • Requiring or inducing a supplier or customer to not deal with a competitor.

  • Refusing to supply scarce goods to a competitor when supplying those goods is economically feasible.

  • Selling goods or services on condition that the buyer purchases separate goods or services unrelated to the object of a contract, or forcing a buyer to accept a condition unrelated to the object of a contract.

  • Selling goods or services below their marginal or average variable cost (predatory pricing).

  • Buying up a scarce supply of intermediate goods or resources required by a competitor.

Dominant firms are also prohibited from engaging in price discrimination with customers. However, this only applies if such price discrimination:

  • Is likely to have the effect of substantially lessening or preventing competition.

  • Relates to the sale (in equivalent transactions) of goods or services of like grade and quality to different purchasers.

  • Is discriminating by:

    • charging different prices;

    • giving different discounts, rebates, allowances, credit;

    • providing different services along with the goods or services;

    • charging different prices in relation to services provided in respect of the goods or services sold.

Regulatory authority

The Competition Commission is responsible for enforcing the provisions of the Competition Act. The Competition Commission acts as the prosecuting body and is responsible for investigating and evaluating complaints. The Competition Tribunal is the adjudicating and decision-making body. If the Competition Commission's investigation reveals that a firm has contravened the Competition Act, it refers the matter to the Competition Tribunal for a hearing. The Competition Tribunal, after hearing both parties, makes a final decision regarding the alleged contravention and the penalty or remedy to be imposed.

Decisions of the Competition Tribunal can be taken on appeal to the Competition Appeal Court.

 
17. How is dominance/market power determined?

Under the Competition Act, a firm is dominant if it has:

  • A market share of 45% in a particular market.

  • A market share of between 35% and 45%, unless it can show that it does not have market power.

  • Less than 35% market share, but has market power.

Market power is defined in the Competition Act as "the power of a firm to control prices, or to exclude competition or to behave to an appreciable extent independently of its competitors, customers or suppliers".

 
18. Are there any broad categories of behaviour that may constitute abusive conduct?

Exemptions and exclusions

19. Are there any exemptions or exclusions?

See Questions 3 and 4.

Notification

20. Is it necessary (or, if not necessary, possible/advisable) to notify the conduct to obtain clearance or (formal or informal) guidance from the regulator? If so, what is the applicable procedure?

Investigations

21. What (if any) procedural differences are there between investigations into monopolies and abuses of market power and investigations into restrictive agreements and practices?

See Questions 6 to 9 and 11 to 12.

 
22. What are the regulator's powers of investigation?

Penalties and enforcement

23. What are the penalties for abuse of market power and what orders can the regulator make?

Third party damages claims

24. Can third parties claim damages for losses suffered as a result of abuse of market power? If so, what special procedures or rules (if any) apply? Are collective/class actions possible?
 

EU law

25. Are there any differences between the powers of the national regulatory authority(ies) and courts in relation to cases dealt with under Article 101 and/or Article 102 of the TFEU, and those dealt with only under national law?

Not applicable.

 

Joint ventures

26. How are joint ventures analysed under competition law?

There is no formal legal definition of a joint venture. However, a joint venture is accepted to be any separate business enterprise over which two or more independent parties exercise joint control. It can be created for a specific purpose such as research and development, production, distribution, purchasing, advertising and promotion, and networking.

Joint ventures are not afforded any special treatment from a competition law perspective. If a joint venture constitutes an arrangement which would otherwise be anti-competitive, it is measured under the "rule of reason" test to determine whether the benefits of the joint venture outweigh any anti-competitive effects that may result from it.

Joint ventures can in certain circumstances also trigger a merger, which requires notification to Competition Commission if the merger notification thresholds are met.

 

Inter-agency co-operation

27. Does the regulatory authority in your jurisdiction co-operate with regulatory authorities in other jurisdictions in relation to infringements of competition law? If so, what is the legal basis for and extent of co-operation (in particular, in relation to the exchange of information)?

The Competition Commission co-operates with regulatory authorities in other jurisdictions, particularly where similar cases of restrictive practices are being investigated or prosecuted in other jurisdictions. The Competition Commission's investigations are thought to be in some instances aligned with other regulator's investigations with information shared between the agencies.

 

Recent cases

28. What are the recent developments or notable recent cases concerning abuse of market power?

The most recent cases concerning abuse of dominance concerned predatory pricing and excessive pricing.

In September 2015, the Competition Tribunal found that a media house had contravened the Competition Act by engaging in a predatory pricing strategy aimed at driving a rival community newspaper publication out of a provincial market. This is the first time since the inception of the Competition Act that a firm has been found guilty of predatory pricing, which involves a firm pricing below its average variable costs.

In June 2015, the Competition Appeal Court heard an appeal by Sasol Chemical Industries (Sasol) against a finding by the Competition Tribunal that Sasol had engaged in excessive pricing of propylene and polypropylene. The Competition Tribunal found that Sasol's pricing to domestic customers was on average 23% higher than the deep sea export price, and on average 41% and 47% higher than the prices in Western Europe for the two relevant grades of polypropylene. The Competition Tribunal also took note of Sasol's policy of import parity pricing, although it did not find that import parity pricing should automatically be considered excessive.

The Sasol appeal was upheld by the Competition Appeal Court, which found that profits above economic value are not necessarily unreasonable. The Competition Appeal Court held that "a price which is significantly less than 20% of the figure employed to determine economic value falls short of justifying judicial interference in this complex area".

 

Proposals for reform

29. Are there any proposals for reform concerning restrictive agreements and market dominance?

The Competition Amendment Act (CAA) was enacted in 2009 but only certain provisions are in force. The CAA will bring about some significant changes in respect of abuse of dominance, personal liability and other ancillary matters. The main provisions of the CAA include:

  • Market inquiries. These provisions give the Competition Commission the power to conduct market inquiries into certain sectors and enable the Competition Commission to play a more proactive role in investigating markets. These provisions are already in force, and the Competition Commission has initiated several market inquiries, the largest being in relation to the healthcare sector.

  • Complex monopolies. These provisions (not yet in force) are intended to deal effectively with uncompetitive outcomes resulting from a multi-firm conduct that restricts or distorts competition to the detriment of consumers.

  • Personal liability. These provisions will, if brought into effect, provide an effective deterrent on cartel activities by introducing criminal sanctions against individuals who caused the firms to engage in illicit cartel activities.

 

Online resources

Southern African Legal Information Institute (SAFLII)

W www.saflii.org

Description. SAFLII is an online repository of legal information from South Africa where the full text of the Competition Act can be found. SAFLII aims to promote the rule of law and judicial accountability by publishing legal material for open access. SAFLII was previously a project of the South African Constitutional Court Trust and is currently in operated by the Democratic Governance and Rights Unit at the University of Cape Town. It is the largest online free-access collection of journals, judgments and legislation from South Africa.



The regulatory authorities

The Competition Commission

T +27 12 394 3200
F +27 12 394 0166
E ccsa@compcom.co.za
W www.compcom.co.za

Outline structure. The Competition Commissioner is the head of the authority and is appointed by the Minister of Trade and Industry. The Competition Commission has two deputy commissioners and an executive committee. Its divisions include:

  • Mergers and Acquisitions.

  • Enforcement and Exemptions.

  • Cartels.

  • Legal Services.

  • Policy and Research.

  • Communication and Stakeholder Relations.

  • Corporate Services.

  • Finance.

Responsibilities. The Competition Commission is responsible for administering and enforcing the Competition Act. This includes investigating and prosecuting complaints of prohibited practices, as well as investigating and approving, conditionally approving or prohibiting notifiable mergers, and referring such mergers to the Competition Tribunal for adjudication.

Procedure for obtaining documents. Once the Competition Commission has instituted proceedings before the Competition Tribunal, it issues a media release describing the transaction or the conduct being referred to the Competition Tribunal and the order being sought. The order and reasons for the decisions are publicly available, subject to claims for confidentiality. Parties can also write to the Competition Commission to request access to specific documentation.

The Competition Tribunal

T +27 12 394 3300
F +27 12 394 0169
E ctsa@comptrib.co.za
W www.comptrib.co.za

Outline structure. The Competition Tribunal consists of a Chairperson, three full-time members and five part-time members.

Responsibilities. The Competition Tribunal is responsible for adjudicating matters referred to it under the Competition Act. It is an independent body and must act impartially and perform its functions without fear, favour or prejudice. The Competition Tribunal must adjudicate complaints regarding prohibited practices, referral of settlement agreements, large mergers, remedies, exemption applications and appeals from decisions made by the Competition Commission.

Procedure for obtaining documents. Once the Competition Commission has instituted proceedings before the Competition Tribunal, it issues a media release describing the transaction or the conduct being referred to the Competition Tribunal and the order being sought. The order and reasons for the decisions are publicly available, subject to claims for confidentiality. Parties can also write to the Competition Commission or the Competition Tribunal to request access to specific documentation.

The Competition Appeal Court

T +27 12 394 3355
F +27 12 394 0169
E ctsa@comptrib.co.za
W www.comptrib.co.za/links/appeal-court/

Outline structure. The Competition Appeal Court consists of eight High Court judges. However, not all eight judges sit at each hearing and this is determined on a case-by-case basis.

Responsibilities. The Competition Appeal Court is responsible for hearing appeals from the Competition Tribunal in respect of prohibited practices or merger decisions.

Procedure for obtaining documents. Once the Competition Commission has instituted proceedings before the Competition Tribunal, it issues a media release describing the transaction or the conduct being referred to the Competition Tribunal and the order being sought. The order and reasons for the decisions are publicly available, subject to claims for confidentiality. Parties can also write to the Competition Commission or the Competition Tribunal to request access to specific documentation.


Contributor profiles

Heather Irvine, Director

Norton Rose Fulbright South Africa

T +27 11 685 8829
E heather.irvine@nortonrosefulbright.com
W www.nortonrosefulbright.com

Professional qualifications. Attorney, South Africa.

Areas of practice. Competition, anti-trust and regulatory

Non-professional qualifications. LLB, magna cum laude, University of Cape Town; Honours in English literature, University of Cape Town; BA English literature, magna cum laude, University of the Witwatersrand.

Recent transactions

  • Involved in some of the most high-profile competition law cases in South Africa since the Competition Act came into effect, including two applications to the Constitutional Court.

  • Currently advising on a dawn raid conducted by the Zambian Competition Authority.

  • Advises on regulatory issues in the telecommunications and energy sector, including recent High Court review applications dealing with ICASA's regulation of wholesale mobile call termination rates and NERSA's recent determination on the maximum charges for piped gas by Sasol Gas.

  • Extensive experience with complex large mergers in Namibia, Botswana, Zambia, Tanzania, Kenya and the COMESA states.

Professional associations/memberships. Co-Chair of the International Bar Association's Young Lawyers Committee.

Publications. Has contributed articles on competition law and related issues to legal journals, including the American Bar Association’s Year in Review for South Africa, South African Mercantile Law Journal and Competition Policy International’s Antitrust Chronicle.


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