South Africa: Provisions Of The Competition Amendment Act Come Into Effect

Last Updated: 16 July 2019
Article by Johan Coetzee, Neil MacKenzie and Stuart Strachan

On 11 July 2019, the Minister of the Department of Trade and Industry (soon to be the Department of Trade, Industry and Competition), Minister Ebrahim Patel, delivered his budget vote speech to the National Assembly. In his speech, the Minister noted six key areas that his Department will focus on:.

  • expanding markets for South African products and facilitating entry into those markets;
  • supporting improved industrial performance, dynamism and competitiveness of local companies;
  • improving the levels of investment in the economy and helping to achieve the target set by the President in SONA last year;
  • promoting economic inclusion, opening up and changing South Africa's market structure, both through industrial funding to new groups and through competition policy;
  • promoting more equitable spatial and industrial development, and
  • improving the capability of the State.

Importantly, in his speech, the Minister stated that the Competition Amendment Act ('Amendment Act') would come into effect from 12 July, to help achieve the goals set in these six key areas.

Some of the more notable amendments which have been gazetted and will take effect from 12 July, include:

  • Merger control:
  • When analyzing a merger, the Commission will usually consider numerous factors, including those listed in section 12A of the Competition Act. The Amendment Act introduces three additional grounds under section 12A for the Commission and Tribunal to consider: (1) the extent of ownership by a party to the merger in another firm or other firms in related markets; (2) the extent to which a party to the merger is related to another firm or other firms in related markets, including through common members or directors, and (3) any other mergers engaged in by a party to a merger for such period as may be stipulated by the Commission.
  • The Amendment Act amends an existing public interest grounds and further introduces a new public interest ground for the Commission and Tribunal to consider. The amendment sees consideration being afforded to medium sized businesses, and a further analysis as to whether the merger has an effect on small and medium sized businesses to 'participate' within relevant markets. The newly introduced ground sees consideration being given to the "promotion of a greater spread of ownership, in particular to increase the levels of ownership by historically disadvantaged persons and workers in firms in the market".
  • Abuse of Dominance:
  • Excessive Pricing: The test for excessive pricing has been reformulated under the Amendment Act, although it is largely reflective of existing case law. It has been explicitly stipulated that where it can be shown by the Commission that the price charged by the dominant firm is prima facie excessive, the onus shifts to the dominant firm to prove that the price is reasonable.
  • Predatory Pricing: The scope of possible cost benchmarks have been amended to include average avoidable cost and average variable cost, in order to allow for a more accurate assessment of exclusionary behaviour.
  • Margin Squeeze: This practice has been included in the list of specific exclusionary acts.
  • Administrative Penalties:
  • While the Act previously provided for "yellow card" offences (no penalty for a first-time contravention), the Amendment Act makes all contraventions subject to a penalty of 10% of a firm's annual turnover.
  • An administrative penalty of 25% of a firm's annual turnover has been included for a second offence.
  • Market Inquiries:
  • The proceedings during market inquiries will focus on categories of market features: (1) market structure, (2) observed market outcomes, and (3) conduct that has an "adverse effect" on competition.
  • Critically, the Commission will be able to take any remedial actions that it considers to be reasonable and practicable, with the exception of divestiture, which can only be imposed by the Tribunal. The Commission's findings and actions will be binding, unless challenged in the Tribunal.
  • Exemptions: Some of the existing grounds on which an exemption may be sought have been amended, and an additional ground has been included:
  • The amended provisions now allow for exemption to be sought:
    • To promote the ability of effective entry into, participation in or expansion within a market by small and medium businesses or firms controlled by historically disadvantaged persons, and
    • For the economic development, growth, transformation or stability of any industry designated by the Minister.
  • Under the newly included ground, an exemption may now also be sought:
  • For competitiveness and efficiency gains that promote employment or industrial expansion.

A number of notable amendments will not take effect from 12 July, including:

  • Merger control: In addition to the competition authorities' merger review process, the Amendment Act includes a parallel notification and investigation process to be administered by a Committee, constituted by the President, comprising of cabinet members and other public officials, who will consider whether a merger involving a foreign acquiring firm has an adverse effect on 'national security interests' which are listed in the Amendment Act.
  • Abuse of Dominance: A customer that enjoys significant buyer power over its suppliers is prevented from abusing its dominance by imposing unfair purchase prices or trading conditions on its suppliers (Monopsony Pricing / Abuse of Buyer Power).
  • Price Discrimination:
  • The Amendment Act introduces an additional ground under which price discrimination may be tested. That is, whether price discrimination has the effect of "impeding the ability of small and medium businesses or firms controlled by historically disadvantaged persons to participate effectively".
  • The Amendment Act also prohibits a dominant firm from refusing to supply small and medium businesses or firms controlled by historically disadvantaged persons in order to circumvent this new, additional ground.
  • If there is an allegation that a dominant firm has price discriminated against small and medium businesses or firms controlled by historically disadvantaged persons, the burden of proof has been adjusted so that a dominant firm will need to show that price discrimination did not impede those particular firms from participating effectively.

The Minister has stated that these further amendments will likely come into effect from November this year, following the publishing of draft regulations and public consultations.

The Minister has further stated that, from the next financial year (which will likely be when all of the provisions of the Amendment Act have taken effect), the Competition Commission plans to initiate one new market inquiry per year, complete more than sixty cartel investigations in the next five years, and initiate ten investigations into abuse of market power by dominant firms.

The overall effect of the Amendment Act is that a greater range of commercial conduct will fall within the scope of competition law, the consequences of non-compliance have become more severe, the resources and powers of the competition authorities have been and will be bolstered, and the competition authorities' activity will increase.

Our team is looking forward to advising and guiding clients through this new and challenging landscape.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions