Africanantitrust regular contributors John Oxenham, Michael-James Currie and Stephany Torres (Primerio and Nortons Inc) authored and presented a paper on the role of non-competition law factors in competition law enforcement at the 2019 CRESSE Conference in Rhodes Island, Greece in early July 2019.
Motivated by the recent, but significant, amendments to South Africa’s Competition Act, the timing of the authors’ paper could not have been better scripted. The Amendment Act was brought into effect on 12 July 2019 – a week after presenting the paper to an esteemed delegation of competition law practitioners and economists.
The paper, titled “South African Competition Law – The role of non-competition factors in enforcing unilateral conduct: Forging ahead or falling behind?” explores the socio-economic context and objectives which underpin the recent amendments to South Africa’s legislation and highlights the expansion of what is often termed “public interest” considerations in competition law enforcement beyond merger control.
Most notably, the authors contextualise the policy debate before providing an in-depth discussion of the new thresholds and standards against which certain abuse of dominance conduct will now be assessed.
The Amendment Act introduces a public interest standard, namely what the effect of certain conduct by dominant entities will have on the ability of “small, medium businesses and businesses owned by previously disadvantaged persons” to participate effectively in the market”.
Looking specifically at the price discrimination and buyer power provisions, the paper notes that, notwithstanding the noble objectives of the Amendment Act, there are potentially a number of unintended consequences which require further deliberation so as not to dampen pro-competitive conduct.
In relation to the price discrimination provisions, the authors conclude that:
“Accordingly, in light of:
- the low market share threshold applicable to “dominant” entities;
- the uncertainty regarding the threshold that must be met in order to sustain a case of prohibited price discrimination;
- the evidentiary burden on a respondent to essentially prove a negative in relation to section 9(3); and
- the threat of an administrative penalty for a first-time offence (potentially on both the South African business and its parent),
the price discrimination provisions pose a material risk to companies in South Africa who have a market share above 35%.”
As part of the presentation of the paper, it was noted that competition policy globally is constantly evolving. Issues such as “big data” and “data protection” have called on antitrust commentators to question whether the existing laws remain adequate to address broader consumer harm concerns. In South Africa, the authors point out that while the South African competition agencies have traditionally turned to European and US precedent in relation to antitrust enforcement, the socio-economic factors which have shaped competition policy in South Africa (at least from Government’s perspective) is unique and constitutes a substantial departure from more established jurisdictions.
Competition policy globally is, therefore, likely to be more divergent than convergent in the next few years.
In concluding, the authors point to the inordinate responsibility placed on the shoulders of the competition agencies in South Africa to exercise their discretion and develop a body of precedent as soon as possible that would hopefully provide practitioners and business with a more objective and transparent benchmark against which to assess their conduct. A task which could prove highly complex as the authorities will inevitable need to develop an objective basis for quantifying public interest considerations – an inherently subjective exercise.
To obtain a copy of the paper, please email the AAT editor by following the contact link below.