Bell Dewar recently presented a paper
co-authored by Neil Mackenzie and Stephen Langbridge at the Fourth
Annual Conference on Competition Law, Economics and Policy in South
Africa hosted by the Competition Commission, Competition Tribunal
and Mandela Institute.
Based on the Competition Tribunal's decision in Competition Commission / Pioneer Foods, a cartel subsists when contact between competitors results in the concurrence of wills between the conspiring firms and behaviour in the market gives effect to the parties intentions.
The paper examines the standard of proof required to show that participation in a cartel agreement stopped from a particular date. This is relevant in two circumstances: where a firm raises a defence of prescription under section 67(1) of the Act, and in determining 'duration' of a firm's participation in the cartel for purposes of calculating the relevant penalty.
In particular, the paper deals with the complex situation which arises when a cartel formaly ceases to operate but coordinated patterns of behavior in the industry continue.
The Pioneer Foods case established the following guiding principles to determine when cartel conduct has ceased:
- The averment by participants in the cartel that a particular agreement has ceased is insufficient. Positive evidence of that fact is required.
- In the case of market division (which was the aspect of the cartel which Pioneer Foods alleged had prescribed), evidence of re-entry into markets which the firm withdrew from as a result of the cartel agreement was required.
- Until re-entry has taken place, the parties continue to benefit from the effect of the agreement. Therefore, while the effect of the agreement continues to be felt, the contravention continues to exist for purposes of section 4.
This issue may have significant implications for firms in
concentrated markets where firms may have behaved in a coordinated
If found guilty of contravening section 4(1)(b) of the Act, firms may face an administrative penalty of up to 10% of annual turnover and in future directors may be exposed to criminal liability.
The full paper is available here:
Continuing Cartel Infractions: Drawing the Line by Neil Mackenzie and Stephen Langbridge
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