South Africa: Observations On The Revised South African Competition Bill

Last Updated: 2 August 2018
Article by ENSafrica Anti-Trust/Competition Department

Most Read Contributor in South Africa, September 2018

On 1 December 2017, the Minister of Economic Development announced the release of the Competition Amendment Bill, 2017 (the "Competition Bill") for public comment. Following the closure of the period for public comments in the first quarter of 2018, a revised Competition Bill (the "Revised Competition Bill") was tabled before Parliament on 11 July 2018.

As with its predecessor, the stated objective of the Revised Competition Bill is to remedy structural defects present in the South African economy (including the high levels of economic concentration in various markets) by amending the Competition Act, 1998 ("Competition Act"). The Revised Competition Bill also introduces additional objectives, which include:

  • a strengthening of the penalty regime;
  • the introduction of greater flexibility in the granting of exemptions that promote transformation and growth;
    intervention by the National Executive in relation to mergers that affect the national security interests of South Africa; and
  • providing the Competition Commission (the "Commission") with powers to conduct impact studies.

Penalty provisions

The Revised Competition Bill proposes a number of amendments to give effect to the objective of strengthening the penalty regime of the Competition Act, including an increase to the maximum administrative penalty payable from 10% to 25% of a firm's turnover in South Africa and its exports from South Africa during the preceding financial year if the conduct constitutes a repeat offence. The quantum of a penalty may be further amplified by the turnover of any firm that controls the firm found to have engaged in the repeat offence. The controlling firm will be jointly and severally liable for the prohibited practice carried out by the controlled firm. The purpose of this inclusion is to encourage parent companies to ensure that subsidiaries are competition law compliant.

Abuse of dominance and price discrimination

The Revised Competition Bill proposes a number of changes to the provisions of the Competition Act that regulate abuse of dominance. These amendments include replacing references in the provision to "consumers" with "customers". According to the Memorandum on the Objects of the Competition Bill, 2018 (the "Memorandum"), the rationale for this change is that all customers involved in commercial transactions should be protected from excessive prices, as opposed to consumers only. Moreover, the Revised Competition Bill proposes amendments that will (i) prevent a dominant firm from requiring a supplier to sell at a price that impedes that supplier's ability to participate in a market and (ii) make specific reference to the prohibition of "margin squeeze" (effectively codifying the case law to this effect).

As regards price discrimination, the current Competition Act requires the complainant to prove, inter alia, that the price discrimination is likely to have the effect of "substantially preventing or lessening competition". The Revised Competition Bill proposes the removal of the qualifier "substantially", which serves to lower the burden of proof required for such a contravention. According to the Memorandum, this deletion will be to the benefit of small and medium businesses falling victim to price discrimination in circumstances where they cannot demonstrate a "substantial" prevention or lessening of competition.

Merger regulation and "national security interests"

The role of public interest considerations in the context of the merger control regime is elevated under the Revised Competition Bill. Specifically, section 12A will potentially be amended such that the competition authorities must still consider public interest issues relating to a merger, even if the proposed transaction will not result in the substantial prevention or lessening of competition.

The Revised Competition Bill also calls for consideration to be given to cross-ownership and cross-directorships of the merging parties and the merged entity. Previous mergers engaged in by one or more of the merging parties must also be considered. According to the Memorandum, these mechanisms will serve to monitor creeping concentrations which, if left unmonitored, may allow merging parties to establish strategic barriers to entry.

In circumstances where an acquiring party is a foreign-owned company (including any firm that is incorporated or effectively managed outside of South Africa), the president is empowered to constitute a committee comprised of ministers and officials with the power to intervene when the proposed merger may adversely affect the country's national security interests. "National security interests" is broadly defined to include, among others, defence capabilities, the use or transfer of sensitive technology outside of South Africa, the supply of important goods/services to citizens or the government, enabling or facilitating the activities of illicit actors (eg, terrorists) and the economic and social stability of South Africa. Under this new section 18A, a foreign acquiring firm will be required to first notify the committee of any intended mergers. The committee will be granted the power to either prohibit the transaction or to permit subsequent notification to the Commission. Importantly, the Commission may not consider the proposed transaction until after it has received the decision from the committee. The committee is afforded 60 days to complete its assessment (which may be extended by the president on good cause shown).

The Revised Competition Bill gives the Commission greater powers to police merger conditions by empowering the Commission to make any appropriate decision regarding any condition relating to a small or intermediate merger.

Market inquiries

The Revised Competition Bill proposes that the Commission be required to consider specific issues, such as whether there are structural features of a market that have an adverse effect on competition (including levels of concentration and barriers to entry for small and medium businesses and firms owned by historically disadvantaged persons). Following a market inquiry, the Commission has a duty to remedy structural features identified as having an adverse effect on competition in the market, which includes remedies such as divestiture.

The Commission's findings and orders pursuant to a market inquiry (excluding findings on divestiture) are binding on the parties involved, unless challenged before the Competition Tribunal (the "Tribunal"). Orders as to divestiture may only be imposed by the Tribunal on the recommendation of the Commission. Notably, the Revised Competition Bill allows for an appeal (rather than a review) to be brought to the Tribunal against any decision taken by the Commission pursuant to a market inquiry.

Other notable amendments

In addition to the above, the Revised Competition Bill proposes:

  • a revised approach to predatory pricing engaged in by a dominant firm which seeks to clarify the economic considerations used to establish predation;
  • that the Commission will be required to publish guidelines relating to the application of the provisions on horizontal and vertical restrictive practices, respectively. This is intended to provide clarity and promote consistent application of the relevant sections in the Competition Act;
  • the introduction of additional grounds that must be considered when granting exemptions, including (i) the ability of small and medium businesses and firms owned or controlled by historically disadvantaged persons to enter and participate in a market; and (ii) competition and efficiency gains that promote employment or industrial expansion;
  • the repeal of Chapter 2A of the Competition Act, which deals with complex monopolies; and
  • empowering the Commission to study the impact of decisions by the South African competition authorities with the aim of enhancing the Commission's advocacy powers and facilitating meaningful assessment of the impact of those decisions on the competitive landscape in South Africa.

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
ENSafrica
 
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
ENSafrica
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must 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