South Africa: Prohibited Practices

Last Updated: 22 February 2012
Article by Webber Wentzel's Competition Practice Group

From a prohibited practices perspective, some of the main legal developments in South Africa were (i) the CAC and the Supreme Court of Appeal's (SCA) scrutiny of the Commission's initiation of complaint investigations, (ii) the Commission's introduction of a fast-track settlement process in respect of its cartel investigations in the construction sector, (iii) new guidance from the CAC on the method of calculating penalties for prohibited cartel conduct; and (iv) the dismissal of an attempted class action damages claim pursuant to a finding of anti-competitive conduct.

The Commission came under significant scrutiny by the courts in a number of cases regarding its initiation and referral of complaint investigations to the Tribunal, following the SCA's Woodlands decision in 2010. In particular, the CAC and the SCA have now ruled in the Woodlands, Loungefoam and Yara & Omnia cases that a complaint referred to the Tribunal by the Commission cannot extend beyond the scope of the complainant's original complaint. The CAC held that it is improper for a party which was not initially cited in a complaint to be brought within the ambit of a complaint by an amendment of the Commission's complaint initiation or a referral. If new evidence comes to light during the course of an investigation that other parties were involved in alleged prohibited conduct, the Commission must initiate new investigations in respect of each additional party not covered in the original complaint. In this regard, the CAC emphasised that the Competition Act requires that the sequence of events in the process must be (i) a complaint into alleged prohibitions is initiated with the Commission; (ii) that complaint is then investigated by the Commission; and (iii) the complaint is referred to the Tribunal. This approach was also followed by the Tribunal in the Commission / SAB case, as the Tribunal considered itself bound by the decisions of the higher courts. The Commission has subsequently brought an appeal of the SCA's decision in the Yara & Omnia case before the Constitutional Court. The Constitutional Court's judgment is pending and it will be interesting to see whether the Constitutional Court will agree with the SCA and CAC's restrictive approach to the Commission's powers in complaint investigations.

Following the Commission's prioritisation of cartel enforcement in the construction sector, the Commission also introduced a "fast-track settlement" procedure to entice construction firms to come forward with information on collusive tendering. The purpose of the process was to allow the Commission to fast-track investigations and their resolution by inviting firms that were involved in bid-rigging to apply and engage in "bulk" settlement of complaints. The Commission's hope was that construction firms would be encouraged to come forward in order to settle on financially advantageous terms and in the process the Commission would obtain information on those firms that did not use the process. This process was in line with the use of similar fast-track settlement procedures in other jurisdictions, such as those introduced by the European Commission in 2008 and other national authorities in Europe. The Commission required firms to submit applications in which they disclosed their involvement in bid-rigging, the projects and the other firms involved, as well as provide undertakings to co-operate with the Commission and cease anti-competitive conduct. Penalties imposed on firms that came forward are to be calculated in accordance with the number of contraventions, whether the applicant had won or lost the bids, the size of the contracts and whether the applicant had settled any claims for damages. A number of construction firms have made use of the Commission's fast-track settlement process and finalisation of these matters is still in process.

In 2011 the Southern Pipeline cases resulted in the setting a new guidance on the method of calculating administrative penalties for price-fixing contraventions. In summary, the methodology adopted by the CAC for calculating an administrative penalty is as follows:

  • as a starting point for the initial calculation of the penalty, regard should be had to the "affected turnover" of the firm. This refers to the turnover in the relevant product market affected by the anti-competitive conduct;
  • the affected turnover figure is then multiplied by the number of years the firm was engaged in the cartel arrangement(s);
  • this product is adjusted (up or down) with reference to the various factors set out in section 59(3) of the Competition Act (for example, the nature, gravity and extent of the contravention, loss or damages suffered as a result of the conduct, profit derived from the conduct, the degree to which the firm co-operated with the Commission, etc.); and
  • if the adjusted total exceeds 10% of the firm's total annual turnover in the financial year preceding that in which the administrative penalty is imposed, the final penalty is then limited to a 10% cap.

While the CAC's methodology provides some greater clarity on the calculation of administrative penalties for cartel contraventions, it does however leave a number of important questions unanswered. For instance, it is still not clear what constitutes a relevant "firm" for purposes of applying the 10% cap. This may have significant implications where the "firm" involved in cartel conduct is an unincorporated division of a large parent company - i.e. would the 10% cap apply only to the turnover of the division involved in cartel behaviour, or would it apply to the turnover of the parent company, which may include turnover of other subsidiaries and divisions that were not involved in the cartel? It is also not clear how one converts into a percentage of turnover the various factors in section 59(3) to be taken into account. This uncertainty may well result in further litigation on the appropriate methodology for calculating administrative penalties in future.

We also foresee further developments in the law regarding civil damages claims pursuant to findings of anti-competitive conduct, potentially in the form of class action claims against firms that contravene the Competition Act. Last year, the Western Cape High Court denied several groups leave to appeal a decision to deny them a class action suit against the major bread companies for their role in price-fixing of bread products. While South Africa currently does not have a great tradition of class action litigation, in future class actions could become more important regarding civil damages claims pursuant to anti-competitive conduct.

In addition, the CAC's recent dismissal of SAA's appeal in the SAA / Comair & Nationwide matter (against the Tribunal's finding of an abuse of dominance by SAA in providing override incentives to travel agents) provided a platform for affected parties to institute civil proceedings in respect of damages suffered as a result of SAA's conduct. Comair has subsequently filed a damages claim against SAA in the High Court. This follows Nationwide's damages claim in 2006 against SAA for a previous abuse, which was ultimately settled. Further successful damages claims against firms that contravene the Competition Act will certainly fuel this area of litigation in future, particularly for firms that suffer loss as a result of anti-competitive conduct, and also for contraveners that will have to oppose damages claims.

All in all, 2011 was an eventful year in the competition law arena in South Africa. We are looking forward to another interesting year ahead and we thank you for your continued support.

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

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

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”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.