1. Legal and enforcement framework
1.1 Which legislative and regulatory provisions regulate dominance in your jurisdiction?
The Competition Act (89/1998), as amended, includes a number of provisions that regulate abuses by dominant firms. In order for these provisions to apply, the Competition Act must be applicable in terms of Section 3(1), which stipulates that "the Competition Act applies to all economic activity within or having an effect within the Republic of South Africa".
Section 7 sets out the legal requirements on when a firm will be considered to be dominant; Sections 8 and 9 specify the conduct that a dominant firm may not engage in.
1.2 Do any special regimes apply in specific sectors?
The Competition Act applies to all economic activity within, or having an effect within, South Africa, except:
- collective bargaining within the meaning of Section 23 of the Constitution and the Labour Relations Act (66/1995);
- a 'collective agreement', as defined in Section 213 of the Labour Relations Act, 1995; and
- concerted conduct designed to achieve a non-commercial socio-economic objective or similar purpose.
Insofar as the Competition Act applies to an industry or sector that is subject to the jurisdiction of another regulatory authority which has jurisdiction in respect of conduct regulated in terms of Chapter 2 (prohibited practices) of the Competition Act, the Competition Act must be construed as establishing concurrent jurisdiction in respect of that conduct. The manner in which the concurrent jurisdiction is exercised in terms of the act and any other public regulation must be managed in accordance with any applicable agreement, such as a memorandum of understanding.
1.3 Is the legislation intended purely to protect economic interests or does it have other aims?
The purpose of the Competition Act is to promote and maintain competition in South Africa in order to:
- promote the efficiency, adaptability and development of the economy;
- provide consumers with competitive prices and product choices;
- promote employment and advance the social and economic welfare of South Africans;
- expand opportunities for South African participation in world markets and recognise the role of foreign competition in South Africa;
- ensure that small and medium-sized enterprises have an equitable opportunity to participate in the economy; and
- promote a greater spread of ownership – in particular, to increase the ownership stakes of firms controlled or owned by historically disadvantaged persons.
1.4 Which authorities are responsible for enforcing the legislation?
The authorities mandated to enforce the Competition Act are:
- the Competition Commission;
- the Competition Tribunal; and
- the Competition Appeal Court (CAC).
The commission is the investigating and prosecuting agency; while the tribunal is the court. Should the commission, through its investigation, determine that a contravention has occurred, it will refer the complaint to the tribunal for adjudication. The tribunal is empowered to decide on whether a contravention of the Competition Act has occurred and impose a penalty or other appropriate remedy. In turn, the CAC hears appeals against decisions of the tribunal. Although these bodies function independently of each other and of the state, the commission and the tribunal are administratively accountable to the Department of Trade, Industry and Competition; while the CAC is part of the judiciary.
1.5 How active are the enforcement authorities in taking action against abuse of dominance in your jurisdiction? What key decisions have the enforcement authorities adopted most recently?
Competition Commission of South Africa v Media 24, the first predatory pricing matter to be litigated, dealt with the question of whether pricing below average total cost may be predatory. The CAC found that the average total cost threshold is inappropriate and a subjective intention is irrelevant to a determination under Section 8(c). Given that Media 24 had priced above average avoidable cost, the CAC found that it had not engaged in prohibited predatory pricing. Since the Constitutional Court dismissed the commission's appeal, the CAC's decision stands.
In Computicket (Pty) Limited v Competition Commission, the CAC dismissed Computicket's appeal against a decision of the tribunal which found that Computicket had engaged in abuse of dominance conduct in contravention of Section 8(d)(i) by excluding rivals through exclusive arrangements with customers or suppliers. The CAC reaffirmed that in order to establish anti-competitive effects for the purposes of Section 8, a complaint must establish that:
- the exclusionary conduct resulted in actual harm to consumer welfare; or
- the exclusionary conduct was substantial or significant in terms of its effects in foreclosing the market to competitors.
In addition, the CAC confirmed that foreclosure of competitors need not be actual foreclosure; potential foreclosure will suffice.
In March 2020, the Department of Trade, Industry and Competition published 'anti-price gouging regulations' which have applied to a prescribed list of essential goods in line with the Disaster Management Act throughout the COVID-19 pandemic. As a result, firms supplying these essential goods are prohibited from implementing a price increase which is not directly proportional to an underlying cost increase. A non-justified increase will be considered 'excessive' for the purposes of Section 8(1)(a) of the Competition Act. In addition, the tribunal published a directive to facilitate urgent and expedited hearings of matters arising from the regulations.
In November 2020, the CAC handed down a judgment in Babelegi Workwear and Industrial Supplies CC v Competition Commission that could significantly affect how abuse of dominance cases are prosecuted. The decision is the first-ever finding by the CAC of excessive pricing and the matter was the first excessive pricing case following the amendment of the Competition Act in 2020. The judgment could mean that small firms (Babelegi enjoyed less than a 5% share of the national market) that may not otherwise have been regarded as dominant outside of a disaster period may be found to have market power due to their ability to raise prices.
2. Definitions and scope of application
2.1 What parties are covered by the dominance legislation? Are any exemptions available?
Any firm that meets the legal requirements for dominance in terms of Section 7 of the Competition Act will be subject to the provisions which specify the conduct that a dominant firm may not engage in. No sectors are exempt from the abuse of dominance regime. In particular, Section 81 of the act states that "this Act binds the State". The Competition Tribunal and the Competition Appeal Court have previously found that state-owned entity South African Airways contravened Section 8 of the Competition Act and imposed an administrative penalty on the airline.
An exemption may be granted if an agreement or practice constitutes a prohibited practice, but is required for its contribution to:
- maintain or promote exports;
- promote the effective entry into, or participation in or expansion within, a market by small and medium-sized enterprises (SMEs) or historically disadvantaged persons;
- change the productive capacity to stop decline in an industry;
- maintain the economic development, growth, transformation or stability of any industry designated by the minister; or
- promote employment or industrial expansion.
Exemptions are also available for the exercise of IP rights. An 'exemption' may be defined as a licence to engage in an activity that would otherwise not be allowed, offering protection from action by the Competition Commission or any other party for potential breach of the Competition Act.
2.2 How is 'dominance' defined in your jurisdiction?
In terms of Section 7 of the Competition Act, a firm is dominant if:
- it has at least 45% of the market;
- it has at least 35% of the market, but less than 45% of the market, unless it can show that it does not have market power; or
- it has less than 35%, of the market, but has market power.
'Market power' is defined as "the power of a firm to control prices, to exclude competition or to behave to an appreciable extent independently of its competitors, customers or suppliers". Simply put, market power is the ability of a firm to set prices above the competitive price level and in doing so earn a greater profit than it would have under competitive conditions in a market.
2.3 How important is market share in assessing dominance in your jurisdiction? Do specific thresholds apply in this regard?
Market shares are central to the statutory test for dominance, which is indicative of market power. In terms of Section 7, firms with a market share of more than 45% are deemed to be dominant. Firms with a market share of between 35% and 45% are considered dominant unless they can show that they do not have market power. Likewise, firms with a market share of less than 35% may be considered dominant if they have market power.
2.4 What other factors are considered when assessing dominance?
The primary considerations in the determination of dominance are market shares and market power. Market power is analysed with reference to the firm's conduct, such as its ability to charge above competitive prices or act independently of its customers, competitors or suppliers.
2.5 How are the product and geographic markets defined in your jurisdiction?
Various approaches and methods have been employed by the competition authorities, economists and courts in determining the exact area of competition which should be addressed. The competition authorities typically approach market definition by determining the degree of substitution between products and/or services, which indicates how closely they compete. A relevant market definition has the following components:
- Product market: The definition of a relevant product market involves an analysis of the products that are considered as substitutable, based on whether the products can technically serve the same purpose and for the same value for money; and
- Geographic market: The definition of a geographic market involves the geographic area within which substitutable products compete, and can be local, regional, national or international in scope. Factors that are considered include transport costs, the degree of cross-border trade, trade barriers and regulatory constraints. The Competition Tribunal has previously determined that it is possible that more than one geographic market can be identified as the relevant market/s.
2.6 Does the dominance legislation make any distinction between dominant purchasers and suppliers?
In terms of recent amendments to the Competition Act in February 2020, dominant firms (in certain designated sectors), as purchasers of goods and services, are prohibited from imposing unfair prices or other trading conditions on SMEs or historically disadvantaged persons. On the other hand, dominant firms which are suppliers of goods and services are also prohibited from price discrimination if it is likely to have the effect of substantially preventing or lessening competition or impeding the ability of SMEs or historically disadvantaged persons to compete effectively in a market.
2.7 Is collective dominance recognised in your jurisdiction? If so, how is it defined?
Sections 8 and 9 of the Competition Act make reference to a 'firm', which is defined as a "person, partnership or trust". The Competition Amendment Act gives the Competition Commission powers to investigate "complex monopoly" conduct in a market and, under certain conditions, it allows the Competition Tribunal to prohibit such behaviour. Complex monopoly behaviour arises where firms in concentrated industries conduct their respective business affairs in a conscious parallel manner or coordinated manner, without any agreement between them, which has the effect of substantially preventing or lessening competition in a market. It is not clear when, or whether, this provision will be brought into force.
2.8 What is the statute of limitations to prosecute abuse of dominance cases in your jurisdiction?
In terms of Section 67(1) of the Competition Act, a complaint in respect of a prohibited practice that ceased more than three years before the complaint was initiated is time barred and may not be referred to the Competition Tribunal. The recent appeal to the Competition Appeal Court (CAC) in Competition Commission v Pickfords Removals SA (Pty) Limited concerned the correct interpretation of Section 67(1). The CAC held, on the facts of the case, that:
- a second initiation statement was an amendment of the first initiation statement;
- Pickfords only became a named party when the second initiation occurred; before that, the alleged prohibited practice did not involve it (as its involvement appeared not to have been contemplated by the Competition Commission); and
- on the basis that the second initiation referred to discrete bilateral agreements, as opposed to a practice, it was open to Pickfords to argue that some of the unlawful agreements on which the commission's complaint referral was based were time barred.
3. Abuse of dominance
3.1 How is 'abuse of dominance' defined in your jurisdiction?
The abuse of dominance provisions contained in Sections 8 and 9 of the Competition Act will apply only if the firm is deemed to be 'dominant' in terms of Section 7 of the Competition Act. Although the Competition Act prohibits the abuse of a dominant position by firms in a market, it does not prohibit firms from holding a dominant position.
3.2 What specific types of conduct constitute an abuse of dominance in your jurisdiction?
In terms of Section 8 of the Competition Act, a dominant firm is per se (outright) prohibited from:
- charging an excessive price to the detriment of consumers or customers; and/or
- refusing to give its competitors access to an essential facility when it is economically feasible to do so.
Unless a dominant firm can show technological, efficiency or other pro-competitive gains which outweigh the anti-competitive effect of its conduct, it may not engage in any of the following exclusionary acts:
- requiring or inducing a supplier or customer not to deal with its competitors;
- refusing to supply scarce goods or services to a competitor or customer when it is economically feasible to do so;
- tying or bundling;
- selling goods and services at predatory prices;
- buying up a scarce supply of intermediate goods or resources required by a competitor; and/or
- engaging in a margin squeeze.
In certain designated sectors, dominant firms – as buyers of goods and services – are prohibited from imposing unfair prices or other trading conditions on a supplier that is a small or medium-sized enterprise (SME) or historically disadvantaged person. Dominant firms are also prohibited from engaging in price discrimination. In terms of Section 9 of the Competition Act, an action by a dominant supplier is prohibited price discrimination if it is likely to have the effect of substantially preventing or lessening competition or impeding the ability of SMEs or historically disadvantaged persons to compete effectively in a market.
3.3 On what grounds may the enforcement authorities commence an abuse of dominance investigation?
Investigations by the Commission into abuse of dominance conduct can be initiated in various different ways. Anyone can lodge a complaint with the Competition Commission. The commission will undertake a preliminary investigation of each complaint to ascertain whether there are in fact competition issues to be examined and what these issues are. While many complaints raise concerns about a particular kind of conduct, these are not necessarily best addressed under the Competition Act, but may belong better in other areas, such as the consumer protection regime; or they may relate to contractual disputes.
The commission can also initiate a complaint itself, as a result of:
- an informant providing information to the commission;
- concerns being raised by industry players, including the Department of Trade, Industry and Competition; or
- the commission's own research and insights gained from its investigations into merger evaluation or market inquiries.
3.4 What powers do the enforcement authorities have in conducting their investigation?
The Competition Commission enjoys extensive powers of investigation which include:
- issuing detailed information requests to a respondent;
- conducting a site visit in order to better understand the relevant market(s);
- summoning for interrogation any person who is believed to be able to furnish any information on the subject of the investigation;
- summoning any person who is believed to have possession or control of any document or other object that has a bearing on the subject of the investigation to produce it; and
- entering and searching any premises.
If a complaint is referred to the Competition Tribunal and following a hearing, a decision will be issued. Where the tribunal decides that there has been a contravention of the Competition Act, it can make an appropriate order, including:
- interdicting the practice;
- imposing an administrative penalty; or
- ordering divestiture.
The penalty may not exceed 10% of the firm's annual turnover in South Africa and exports from South Africa during its preceding financial year. Divestiture may further be ordered for contraventions of Section 8 if the practice cannot otherwise be adequately remedied or if it is substantially a repeat of conduct.
3.5 Is there an opportunity for third parties to participate in the investigation?
Third parties can make representations during the course of an investigation; however, no automatic rights exist. In addition, in the event that the Competition Commission requires additional information (including documents), it can request any third party to provide such information. In circumstances where a formal investigation is undertaken, the Competition Act confers broad investigative powers on the commission to:
- summon any person who is believed to have information or documents that may assist the commission's investigation; or
- enter the premises for purposes of search and seizure operations.
3.6 What are the general rights and obligations of the enforcement authorities during the investigation?
The Competition Commission has the power to enter and search any premises based on a reasonable suspicion of a prohibited practice taking place or having taken place; or because there is something connected to an investigation that is in the possession or control of a person on the premises. This search and seizure activity is also termed a 'dawn raid'. During a search and seizure, investigators may:
- examine documents;
- request further information;
- take extracts from and make copies of all documents that they believe are relevant to the investigation; and
- attach and remove evidence, including reproducing electronically stored information.
Search and seizure operations are carried out in terms of a warrant issued by a judge of the High Court or a magistrate.
3.7 What are the general rights and obligations of the target company during the investigation? What are the general rights and obligations of individuals targeted during the investigation?
It is important not to hinder an investigation by the Competition Commission. It is an offence to oppose, obstruct or unduly influence any person who is exercising a power or performing a duty delegated, conferred or imposed on that person. A person will also commit an offence if, having been summoned to attend a hearing, he or she fails to appear or refuse to produce a book, document or other item as ordered, if it is in the possession of, or under the control of, that person. In addition, a person commits an offence where, having been sworn in or having made an affirmation, he or she fails to answer any question fully and to the best of his or her ability or gives false evidence.
3.8 What factors will the enforcement authorities consider in assessing whether an abuse of dominance has taken place?
For liability to be established in an abuse of dominance matter, the following must be established:
- The firm in question must be dominant;
- The conduct outlined in Section 8 or 9 of the Competition Act must be found to be present; and
- The anti-competitive effect of such conduct must outweigh any technological, efficiency or pro-competitive gains.
In relation to the determination of dominance, a firm is presumed to be dominant if the respondent holds a market share of 45% or more. With a market share of between 35% and 45%, the onus is on the respondent to prove that it does not have market power. With a market share of less than 35%, the onus is on the complainant to prove that the respondent has market power.
Dominance need not arise in the market where the conduct occurs and it is possible to find a contravention of the act where there is dominance in a related market that is being leveraged into a market where the firm is not dominant. As to anti-competitive effects, in Nationwide Airlines (Pty) Limited v South African Airways (Pty) Limited, the Competition Tribunal found that for an abuse to arise, it does not require evidence of actual harm to consumers; evidence of significant likely exclusion (foreclosure of the market to competition) is sufficient.
In terms of the conduct outlined in Sections 8 and 9 of the Competition Act, that conduct will have an anti-competitive effect if:
- there is evidence of actual harm to consumer welfare; or
- the exclusionary act is substantial or significant in terms of its effect in foreclosing the market to rivals.
Conduct with an anti-competitive effect can then be measured against any potential technological, efficiency or pre-competitive gains. If those gains do not outweigh the anti-competitive effect of the conduct, a contravention will be found to have occurred.
3.9 In case of a finding of abuse of dominance, can the company seek to negotiate a settlement or similar resolution? If so, what is the process for doing so?
At any stage prior to the final determination of complaint proceedings before the Competition Tribunal, the parties can enter into a consent agreement (settlement agreement) and have the agreement confirmed by the tribunal as a consent order. When considering the terms of the agreement, the tribunal will also consider the implications of the agreement on the broader public interest. Generally, a consent agreement contains the following:
- a background section summarising the Competition Commission's findings;
- a section dealing with the respondent's version of events culminating in the consent agreement;
- a section which records the section(s) of the Competition Act that were contravened;
- a section in which the respondent admits or denies liability;
- a section in terms whereof the respondent is placed under a positive obligation to engage in conduct to minimise the risk of a repeat offence;
- a section in which the administrative penalty is agreed to; and
- a section in which the respondent may agree to pay the complainant's damages as well as the amount agreed upon.
After hearing a motion for a consent order, the tribunal may:
- make the order as agreed to and proposed by the commission and the respondent;
- indicate any changes that must be made in the draft order; or
- refuse to make the order.
4. Defences
4.1 What defences are available to companies in response to enforcement?
The primary defences are as follows:
- There is no dominance on the part of the respondent firm in any relevant market;
- The conduct involved does not constitute prohibited conduct;
- The effect of the conduct is not anti-competitive; or
- There are technological, efficiency or pro-competitive justifications for the conduct which outweigh any anti-competitive effect.
4.2 Can companies avail of leniency in abuse of dominance cases?
No, the Competition Commission's Corporate Leniency Policy applies only to cartel behaviour.
5. Remedies and sanctions
5.1 What remedies and sanctions may be imposed for abuse of dominance? Can sanctions be imposed on individuals?
The competition authorities can regulate the enforcement of the Competition Act through the following remedies and sanctions:
- issuing consent orders (settlement agreements);
- imposing an administrative penalty of up to 10% of the firm's annual turnover in South Africa and its exports from South Africa during the firm's preceding financial year;
- interdicting any prohibited practice;
- issuing positive measures, such as ordering a party to supply or distribute goods or services to another party on terms reasonably required to end a prohibited practice;
- declaring the conduct of a firm to be a prohibited practice for the purposes of allowing for civil damages actions;
- ordering divestiture; and
- imposing personal criminal sanctions.
5.2 How are the remedies and sanctions in abuse of dominance cases determined?
In terms of Section 59 of the Competition Act, when determining an appropriate penalty, the Competition Tribunal must consider the following factors:
- the nature, duration, gravity and extent of the contravention;
- any loss or damage suffered as a result of the contravention;
- the behaviour of the respondent;
- the market circumstances in which the contravention took place;
- the level of profit derived from the contravention;
- the degree to which the respondent has cooperated with the competition authorities; and
- whether the respondent has previously been found in contravention of the Competition Act.
The Competition Appeal Court (CAC) has set out a method that must be taken into account in determining an administrative penalty. The Guidelines for the Determination of Administrative Penalties for Prohibited Practices set out a six-stage that involves the following steps:
- the determination of the affected turnover (the turnover in the line of business that was the subject of the prohibited conduct);
- the calculation of the base amount (with reference to the affected turnover in the relevant year);
- the duration of the contravention;
- a comparison of the base amount against the statutory 10% limit;
- consideration of aggravating and mitigating factors; and
- another comparison of the resultant amount against the statutory limit.
The CAC will issue an order for divestiture only in circumstances where the prohibited practice:
- cannot adequately be remedied in terms of another provision of the Competition Act; or
- is a repeat by that firm of conduct previously found by the tribunal to be a prohibited practice.
5.3 Can the enforcement authorities impose remedies and sanctions directly or is court action required?
The Competition Tribunal can impose behavioural remedies, including:
- interdicting any prohibited practice;
- ordering a party to supply or distribute goods or services; and
- ordering access to an essential facility.
The tribunal may also order divestiture for an abuse of dominance if that prohibited practice:
- cannot adequately be remedied in terms of another provision of the Competition Act; or
- is a repeat by that firm of conduct previously found by the Tribunal to be a prohibited practice.
6. Appeal
6.1 Can the defendant company appeal the enforcement authorities' decision? If so, in what forum and what is the process for appeal?
Yes. After the investigation of a complaint of abuse of dominance, either the Competition Commission or the complainant (if the commission is not the complainant) can refer the matter to the Competition Tribunal for adjudication. Either the applicant or the respondent can appeal a decision of the tribunal to the Competition Appeal Court (CAC). The CAC's decision can then be appealed to the Constitutional Court if the Constitutional Court grants leave, which it will do only if the matter is "in the interests of justice".
6.2 Can third parties appeal the enforcement authorities' decision, and if so, in what circumstances?
Section 61 of the Competition Act provides that "a person" affected by a decision of the Competition Tribunal may appeal that decision in accordance with the CAC Rules. The rules state that "any person" that has a right of appeal may file a notice of appeal with the CAC. This wording indicates that it is not restricted to the complainant or respondent to institute an appeal; any person who has been affected by the conduct may do so. As a general rule, it can then be accepted that any of the parties to the proceedings before the tribunal will have a right of appeal.
7. Private enforcement
7.1 Are private enforcement actions against abuse of dominance available in your jurisdiction? If so, where can they be brought?
Yes, the Competition Act provides for a range of private enforcement actions which include interim relief, declarators and damages claims. In terms of Section 49 of the Competition Act, a party that applies for interim relief must apply to the Competition Tribunal. An application should be considered in circumstances when the complainant cannot afford to wait for the Competition Commission to complete its investigation of the complaint. In terms of Section 58 of the Competition Act, a declarator may be sought to declare conduct of a firm to be a prohibited practice for the purpose of commencing an action for civil damages or declaring the whole or any part of an agreement to be void. In terms of Section 65(6) of the Competition Act, a person that has suffered loss or damage as a result of a prohibited practice may institute a damages action in a civil court, unless that person has already been awarded damages in terms of a consent order confirmed by the tribunal. A person's right to bring a civil action comes into existence on the date that the tribunal or the Competition Appeal Court (CAC) makes a determination in terms of an abuse of dominance matter.
7.2 Are class actions or other forms of collective action available in your jurisdiction?
Class actions are recognised under the South African Constitution, but have not been regulated by the Competition Act (or other statutes), as is commonly done in other international jurisdictions. The procedure for dealing with group or class-related claims is set out in the South African High Court Rules and the 1996 Constitution. There is no statutory definition of a 'class action' that specifies the requirements of a class action or what constitutes a class action. The procedure for the handling of class or group actions in South Africa is in a developing stage, and judgments of the Supreme Court of Appeal and the Constitutional Court provide much-needed guidance for the development of class actions in South Africa.
7.3 What process do private enforcement actions follow?
In most instances, interim relief is of an interdictory nature (to prevent ongoing conduct) or for the supply of goods on specified terms. A party seeking interim relief must file an application with the Competition Tribunal setting out each prohibited practice in respect of which the application is made and indicating the order sought, including the section under which the order may be granted.
Civil damages actions require a certificate from the tribunal or the CAC:
- certifying that the conduct forming the basis of the damages claim has been found to be a prohibited practice;
- stating the date of the tribunal or CAC finding; and
- setting out the section of the Competition Act that was contravened.
The certificate must be filed with the registrar or clerk of the court and is conclusive proof of its contents and is binding on a civil court. Importantly, interest on a debt in relation to a claim for damages will commence on the date of issue of the certificate by the tribunal or CAC. The civil courts are then tasked with assessing whether the elements necessary for a successful damages action are satisfied.
In August 2016 the South Gauteng High Court handed down a judgment in favour of Nationwide Airlines (Pty) Limited (in liquidation) against South African Airways (Pty) Limited arising from a prohibited practice finding before the tribunal. The South Gauteng High Court found in favour of Nationwide Airlines in the amount of ZAR 104 million (including interest). This was the first damages action before the High Court to be litigated following a prohibited practice finding before the tribunal, setting a precedent in South African competition law.
7.4 What types of relief may be sought and what types of relief are most commonly awarded? How is the relief awarded determined?
Interim relief (once a complaint has been filed with the Competition Commission) may be sought to prevent ongoing conduct or for the supply of goods on specified terms. Interim relief orders are not commonly awarded by the Competition Tribunal.
In terms of damages actions, only two matters have been pursued to date, with the Nationwide matter being the first. With regard to damages claims, it is important to distinguish between:
- the elements of harm and causation that must be proved for the purpose of establishing a prohibited practice under the Competition Act; and
- those that must be proved for the purpose of proving damages in a civil court.
The former relates to the need to establish a substantial anti-competitive effect arising from the respondent's conduct; whereas the latter concerns proof of loss as a result of the respondent's conduct constituting the prohibited practice. It will be necessary for a plaintiff in High Court proceedings to traverse some evidence heard before the tribunal, in order to prove its damages claim. The plaintiff will be required to:
- link the losses that are alleged to have been suffered to specific conduct on the part of the respondent; and
- establish that the one is causally related to the other, notwithstanding that much of this evidence is similar to that heard by the tribunal.
Proof of quantum concerns the quantification of the losses that have been suffered by the plaintiff and normally involves a detailed analysis requiring the input of experts such as economists.
7.5 Can the decision in a private enforcement action be appealed? If so, to which reviewing authority?
Yes, interim relief orders can in certain instances be taken on appeal or review to the CAC and civil damages judgments may be taken on appeal to the Supreme Court of Appeal.
8. Trends and predictions
8.1 How would you describe the current dominance enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
The Competition Commission has published its first Economy Concentration Tracker Report which was handed over to Minister Patel of the Department of Trade, Industry and Competition on 7 December 2021. The report details the levels of concentration and participation in 178 markets and how these have been evolving over the past five to 10 years. Sectors highlighted in the report include the following:
- airlines;
- agriculture;
- automotive;
- communication;
- construction;
- energy;
- farming;
- financial services;
- fishing;
- forestry;
- gambling;
- grain;
- healthcare;
- livestock;
- liquor and cigarettes;
- media;
- potato;
- real estate;
- retail; and
- sugar.
The report also indicates that the top 10% of companies earn 86% of all income, while the bottom 50% earn only 1.6% of income. Small and medium-sized enterprises (SMEs) account for 95%, by volume of taxpaying enterprises and create jobs for 38% of the workforce, but account for only 24% of firm revenue in the economy. Amendments have already been made to the Competition Act in February 2020 to address these challenges by introducing contraventions for the abuse of buyer power and price discrimination against SMEs.
In efforts to decrease concentration levels, the commission has, through the report, made several recommendations. Some of the key recommendations relate to:
- reforming competition policy in the public sector;
- increasing funding and support to SMEs; and
- garnering support and buy-in for the transformation of markets in the private sector.
9. Tips and traps
9.1 What would be your recommendations to companies to avoid an abuse of dominance charge and what potential pitfalls would you highlight?
It is vital to take cognisance of the Economy Concentration Tracker Report (see question 8), since the Competition Commission has highlighted that it will form the basis of strategic enforcement of the Competition Act and will pave the way for policy centred on a concentrated economy. We can expect closer scrutiny of role players with large market shares, especially in those sectors that are expressly mentioned in the report. Companies operating within these industries should ensure that they have competition law compliance programmes in place.
The recent price gouging cases (including Babelegi) are sending a warning to any firm seeking to take advantage not only of demand shocks caused by the COVID-19 pandemic, but of any demand shocks. As a result, all firms – regardless of size – are encouraged to remain cognisant of their pricing policies. A firm that can unilaterally increase prices by more than 5% could well be found to possess sufficient market power and be considered dominant for purposes of Section 7 of the Competition Act. Recent amendments to the Competition Act allow for a much stricter penalty for a second offence (including abuse of dominance contraventions): 10% of annual turnover for first contravention and 25% of annual turnover for repeat conduct.
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.