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Tag: What is competition law and why is it important

what is competition law in south africa

what is competition law in south africa插图

Anti-trust law
Competition Law of South Africa is a thorough analysis ofanti-trust lawin South Africa,including historical and comparative competition law; purpose,interpretation and jurisdiction; restrictive,horizontal and vertical practices; abuse of dominance; mergers; procedural aspects of competition law (including investigations by the Competition Commission); and consequences of non-compliance.

What is the Competition Act in South Africa?

The Competition Act No 18 of 1998 (“ the Competition Act ”) which regulates competition in South Africa, seeks to promote and maintain competition in order to: (a) promote the efficiency. adaptability and development of the economy; (b) provide consumers with competitive prices and product choices;

What is competition law and why is it important?

By definition, Competition Law seeks to ensure the efficient allocation of scarce economic resources through the protection of free market competition, thus enhancing productive and allocative efficiency, leading to improved consumer welfare. The importance of Competition Law in an emerging economy such as ours cannot be overstated.

What does the South African Competition Tribunal say about dominance?

Earlier this month, the South African Competition Tribunal found a firm guilty of abusing its dominance. The firm was a small trader with a market share of 4.7%. The illegal conduct comprised excessive pricing of face masks for a period of just over one month.

What is the purpose of the Competition Act 89?

The Competition Act 89 of 1998 intends: to provide for the establishment of a Competition Commission responsible for the investigation, control and evaluation of restrictive practices, abuse of dominant position, and mergers; and for the establishment of a Competition Tribunal responsible to adjudicate such matters; and

What is dawn raid?

A dawn raid is an unannounced investigative search by the Commission at a company’s premises and gets its name from the investigators’ habit of arriving at the beginning of the business day , when firms are likely to be least prepared for the unexpected raid.

What was the steel producer’s collusive activities?

In agreeing to pay the administrative penalty, it was admitted that the steel producer had engaged in collusive activities by fixing prices and discounts, allocating customers and sharing commercially sensitive information through industry bodies. The steel producer further admitted that it had differentiated between customers by offering varying discounts and that such amounted to price discrimination.

How long can you be in jail for competition?

The Competition Act now provides for the imposition of a fine not exceeding R500 000, or imprisonment for a period not exceeding 10 years, or both such fine and imprisonment on individuals within a company.

What is competition law in South Africa?

By definition, Competition Law seeks to ensure the efficient allocation of scarce economic resources through the protection of free market competition, thus enhancing productive and allocative efficiency, leading to improved consumer welfare. The importance of Competition Law in an emerging economy such as ours cannot be overstated. With the markets in such economies generally being concentrated, characterised by high barriers to entry and significant levels of state ownership in the form of state-owned monopolies, Competition Law should be on everyone’s risk radar.

What is the settlement agreement between South Africa’s largest steel producer and the Competition Commission?

In November 2016, the Competition Tribunal (“Tribunal”) confirmed, as an order of the Tribunal, a settlement agreement between one of South Africa’s largest steel producers and the Competition Commission. The producer agreed to pay an administrative penalty of R1.5 billion in relation to six separate antitrust complaints.

When was cartel conduct criminalized in South Africa?

1 May 2016 saw the criminalisation of cartel conduct in South Africa under the Competition Act, by way of the introduction of section 73A.

Has the dawn raid increased?

Since 2015, the Commission has slowly but surely increased the number of dawn raids it has conducted on an annual basis . In the wake of the Commission’s increased reliance on dawn raids, it has become more important than ever for firms and their employees to be aware of their rights and duties as well as best practices that should be applied in anticipation or response to a dawn raid.

What are the results of effective competition?

The conventional results of effective competition are lower prices, better service delivery and innovation in respect of product and service offerings. To achieve these outcomes, the competition authorities have powers to assess mergers to ensure that concentrations in markets don’t diminish competition in an unjustifiable way, and to investigate, …

What is competition law?

Competition law is aimed at regulating economic behaviour of firms to ensure that the most competitive outcomes are achieved in any particular market. Competition law ensures that rivals continue to put their best foot forward, so to speak, and ensure that consumers ultimately benefit from these competitive endeavours.

Why is competition important in South Africa?

In South Africa, there is the further objective of competition legislation in ensuring that the economy is open to greater ownership, by a larger number of South Africans, to ensure the efficient functioning of the economy to the benefit of all. This is a reaction to South Africa’s pre-democracy past. Accordingly, the enforcement of competition law …

Is competition law more prevalent in Africa?

Competition law is becoming more prevalent across Africa, with most countries on the continent now actively enforcing or implementing it. Businesses should always be aware of the restrictions and opportunities that competition law presents and bear in mind that these laws are in place to ensure the efficient functioning of markets, …

Is coordinated conduct between competing businesses outright prohibited?

On the other hand, coordinated conduct between competing businesses is outright prohibited in terms of competition law and transgressing businesses can expect the imposition of substantial penalties for such conduct. Other forms of anti-competitive behaviour are also regulated, such as abuses of market power and vertical (customer / supplier) …

Is competition law enforced in South Africa?

Accordingly, the enforcement of competition law cannot be separated from the overall empowerment and transformation objectives of the new South Africa. The competition authorities, in enforcing these laws, are legislatively obliged to exercise their powers within the construct of socio-economic imperatives.

What are the legal standards for merger control?

The legal standards for merger control are general and evidently permissive. The competition policy standard, which must be assessed first, is whether the merger “is likely to substantially prevent or lessen competition.” That determination requires a multi-factor analysis, set out in the statute, to assess the probability that firms will compete or co-operate after the merger. Factors to consider include import competition, ease of entry, tariff and regulatory barriers, concentration, any history of collusion, countervailing power, dynamic characteristics such as growth, innovation, and product differentiation, vertical integration, business failure, and removal of an effective competitor. (Sec. 12A(1)) If the competition analysis indicates a problem, the next step is to determine whether technological, efficiency, or other pro-competitive gains would be likely to offset the anti-competitive effects—and would not likely be obtained absent the merger. (Sec. 12A(1)(a)(i)) Whether efficiencies must be passed on to, or demonstrably benefit, consumers depends upon the nature of the claimed efficiencies. The Tribunal distinguishes “real,” quantifiable efficiencies, for which a clear showing of consumer benefit is less necessary, from “less compelling” claims for which there should be a demonstration that the benefit is passed through to consumers.

What is the first rule of competition law?

The Competition Act’s first rule about horizontal restraints is a prohibition based on the rule of reason. Restrictive horizontal practices – that is, agreements, concerted practices, or decisions by an association of competitors – are prohibited if the have the effect of substantially lessening or preventing competition in a market. The characterisation of the kinds of arrangements that are prohibited is modelled on terms used in EU competition law. The prohibition can be overcome by a showing that pro-competitive gains outweigh the anti-competitive effect. (Sec. 4(1)(a)) The range of interests that may be considered under Sec. 4(1)(a) is limited to technology, productive efficiency, or other factors related to the competitive effect of the restraint. Consideration of other policies is a matter for the exemption process under Sec. 10.

What is the purpose of the Competition Act?

The Competition Act’s policy purposes begin with economic efficiency, but they extend much further. The primary, general purpose, to “promote and maintain competition ,” is supplemented by six particular sets of goals. The first of these is the efficiency, adaptability, and development of the economy. This goal corresponds to the DTI interest in a competition policy based on economic analysis. The second goal, competitive prices and choices for consumers, recognises the foundation of an economics-based policy in concerns about consumer welfare. The other 4 sets of policy goals represent other public interest issues that have been important to stakeholders in the debate: employment and social and economic welfare, opportunities to participate in world markets (and to recognise foreign competition in South Africa), equitable opportunities for SMEs to participate in the economy, and increasing the ownership stakes of historically disadvantaged persons. (Sec. 2)

What was the challenge of South Africa’s economic policy?

The challenge for competition policy in South Africa was to “hit the ground running” when historical patterns were broken. New institutions have had to deal on equal terms with the established, sophisticated, well-resourced legal culture, while representing new ideas about the political economy and a new level of participation in public life.

What was the South African revolution?

One of the elements of South Africa’s peaceful revolution over the last decade was reform of its competition policy institutions. The previous system had supported the previous economic system, characterised by autarky, protection, government direction, and high concentration. The new system promised to use competition policy to correct the faults of the old system and to promote policy goals of employment and empowerment. South Africa aspires to a modern competition policy regime, to deal with the well-resourced sophistication of much of the South African economy. Its new institutions, whose novelty responds in large part to the post-1994 imperative for fundamental restructuring of government institutions, have shown a capacity to deal confidently with complex structural issues in deciding dozens of merger cases. A legalistic business and government culture has challenged these new bodies to prove their competence and tested their jurisdiction. Now that the merger review process has been established, more attention should be paid to non-merger matters and probably to advocacy as well. Resources are stretched, and there is a critical need to improve the depth and strengthen the capacity of the professional staff. Maintaining consistent competition policy in regulated sectors will requiring reinforcing the relationships with sectoral regulators.

What is the OECD Centre for Co-operation with Non-Members?

The OECD Centre for Co-operation with Non Members has promoted a mutually beneficial dialogue between OECD members and non-member economies. National competition authorities from around the world, and some countries that do not yet have competition authorities, meet at the OECD Global Forum on Competition (GFC), one of the Organisation’s eight Global Forums. The GFC seeks to advance a range of objectives, including the promotion of global enforcement co-operation, effective law enforcement against international cartels, greater efficiency of merger review procedures, and the development of analysis and dissemination of its results.

What is CCNM in OECD?

The OECD Centre for Co-operation with Non-members (CCNM) promotes and co-ordinatesOECD’s policy dialogue and co-operation with economies outside the OECD area. The OECDcurrently maintains policy co-operation with approximately 70 non-member economies.The essence of CCNM co-operative programmes with non-members is to make the rich andvaried assets of the OECD available beyond its current membership to interested non-members.For example, the OECD’s unique co-operative working methods that have been developedover many years; a stock of best practices across all areas of public policy experiences amongmembers; on-going policy dialogue among senior representatives from capitals, reinforcedby reciprocal peer pressure; and the capacity to address interdisciplinary issues. All of this issupported by a rich historical database and strong analytical capacity within the Secretariat.Likewise, member countries benefit from the exchange of experience with experts and officialsfrom non-member economies.

What is the ARC in Mozambique?

10/2013, which establishes the legal framework for competition in Mozambique and creates the Competition Regulatory Authority ("ARC"), which will enforce it.

What does "excessive price" mean?

one which bears no reasonable relation to the economic value of that good or service and which is higher than such value); and/or. refusing to give its competitors access to an essential facility when it is in fact economically feasible to do so.

What is the danger of a dominant firm?

The danger posed by a dominant firm is that it is able to conduct its business without any consideration of its customers or competitors, and potentially act in a way which is detrimental to competition. A firm may abuse its dominance by using its influence and power in the market to impose commercial deals favourable to it with suppliers …

What is 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 or other trading conditions without having regard to market forces or conditions and in doing so, …

What is Section 7 of the ACT?

Section 7 of the Act sets out the criteria which are used in determining whether or not a firm is dominant. The Act states that a firm is dominant if:

What is the purpose of the Competition Act?

The Competition Act (89 of 1998) includes a number of provisions aimed at preventing abuses by dominant firms. Along with preventing collusion between suppliers of goods and services, preventing abuse of dominance is what most people understand as the role of competition regulation, and certainly it is a foundational aspect of competition law.

How can a firm abuse its dominance?

A firm may abuse its dominance by using its influence and power in the market to impose commercial deals favourable to it with suppliers and unilaterally increase its prices charged to customers and consumers , for example. In order to curb this, the Act contains a number of prohibitions which apply to dominant firms.