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Have Confidential Info? Follow the Guidelines…

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South African Competition Commission Releases Draft Guidelines on Handling Confidential Information

By Olivia Sousa Holl

Introduction

On 3 February 2024, the Competition Commission of South Africa (“Commission”) released draft guidelines (“Guidelines”) that govern the handling of confidential information, the access thereto and the disclosure of such. The investigative and adjudicative powers granted to the competition authorities in South Africa, enable the frequent handling of sensitive business information. Some have raised concerns regarding overly broad confidentiality claims that hinder the Commission’s ability to conduct investigations in a transparent and efficient manner. These guidelines seek to strike a balance between protecting commercially sensitive data while ensuring fairness, transparency, and public engagement with Competition Authorities’ decisions and reasons which form the basis of competition law jurisprudence.

These guidelines intend to provide clarity on how firms and individuals can claim confidentiality over submitted information and how the Commission will assess such claims. They also establish a framework for determining who may access confidential information and under what conditions. The guidelines discourage excessive redaction, and blanket confidentiality claims that obstruct legal proceedings and prevent meaningful participation by affected parties, such as trade unions and public interest groups. Ultimately, aiming to ensure that competition law processes continue to uphold principles of fairness and procedural justice.

The Competition Act No. 89 of 1998 (“Act”) defines what constitutes confidential information, as “trade, business, or individual information that belongs to a firm, has a particular economic value, and is not generally available to or known by others” in section 1(1)(vii).

The Guidelines emphasise that all three criteria must be met for a confidentiality claim to be valid. According to section 44(1)(b) of the Act, a confidentiality claim must be supported by a written statement explaining why the information is confidential. The guidelines further emphasise that overly broad claims will not be accepted and that firms must justify their claims with specific reasons.

In the Guidelines, the Commission has identified that which is considered to generally constitute confidential information, such as, trade secrets, pricing strategies, financial records of unlisted firms, and internal business strategy documents. The Guidelines then go on to state that information such as that which is publicly available, financial statements, shareholding structures, product descriptions, and industry-wide historical data are unlikely to qualify for confidentiality protection.

Claiming Confidentiality: The Form CC7 Process

Section 44(4) of the Act mandates that firms submit both a confidential and non-confidential version of their submissions. Failure to submit a Form CC7 with a written justification may result in the Commission rejecting the confidentiality claim. Once a confidentiality claim has been made, as per section 44(2) of the Act, the Commission must treat the information as confidential until a final determination is reached.

To claim confidentiality, firms must submit a Form CC7, which require:

  1. Identification of the confidential information, including the document name, page, and line number.
  2. A justification for why the information qualifies as confidential, explaining its economic value and how disclosure would cause harm.
  3. Details of existing access restrictions, specifying who currently has access to the information and under what conditions.

Balancing confidentiality and fairness

While the guidelines reinforce the importance of protecting genuinely sensitive information, they also stress the need to balance confidentiality with fairness in competition law proceedings. Various regimes of access to confidential information are outlined, depending on the role and interests of the requesting party.

In most cases, confidential information may be shared with a requesting party’s external legal representatives and economic experts, provided they sign a strict confidentiality undertaking. Section 44(9) explicitly permits the “disclosure of confidential information to the independent legal representatives and economic advisors of a person requesting access, in a manner determined by the circumstances and subject to appropriate confidentiality undertakings, is an appropriate determination concerning access”. (Competition Act)

This access regime ensures that merger parties, respondents, and intervenors can engage meaningfully in legal proceedings without direct access to their competitor’s sensitive business data.

Access by public officials and third parties

The guidelines also address access to confidential information by public officials and third parties. The Minister of Trade, Industry, and Competition has a statutory right to access confidential information in merger proceedings, as provided for in Section 45(3)(a) of the Act. Trade unions and employee representatives must also be given sufficient access to merger-related documents to participate meaningfully in Tribunal hearings.

Public Interest

The guidelines acknowledge the public interest in access to competition law decisions. Warning against excessive redaction, which can undermine transparency and legal precedent. In market inquiries, firms are prohibited from claiming confidentiality over an entire submission, instead it should provide a redacted public version of documents within five days of filing confidential submissions.

If the Commission rejects a confidentiality claim, the claimant has the right to appeal the decision to the Competition Tribunal under Section 45(1) of the Act. If dissatisfied with the Tribunal’s ruling, they may further appeal to the Competition Appeal Court (“CAC”) under Section 45(2) of the Act.

In resolving confidentiality disputes, the Tribunal applies a balancing test that considers:

  • The right to a fair hearing (ensuring parties can properly engage with evidence).
  • The need to protect confidential business interests.
  • The public interest in transparency and competition law enforcement.

The guidelines reinforce that the default position is disclosure, particularly for independent legal advisors, and that confidentiality claims must be well-founded

The Commission also confirms that the unauthorised disclosure of confidential information is a violation of the Act. However, it emphasises that these guidelines are intended to improve transparency and procedural fairness while maintaining robust protections for sensitive business information. The Commission reserves the right to amend the guidelines periodically based on legal developments, stakeholder feedback, and international best practices in competition law enforcement.

Public comment

The Competition Commission invites public comments on the draft guidelines, with written submissions due before 3 March 2025. These guidelines represent a significant step toward improving transparency, procedural fairness, and public access to competition law decisions while maintaining necessary protections for business confidentiality.

Betting on Fair Play: Competition Tribunal orders Interim Relief to Lottoland in Google Ads dispute

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By Matthew Freer

Introduction

On 12 November 2024, Lottoland South Africa (Pty) Ltd (“Lottoland”) was granted interim relief by The Competition Tribunal (“The Tribunal”) against Google Ireland Limited and Google South Africa (Pty) Ltd (collectively “Google”).

Lottoland, a licensed bookmaker as of 7 November 2017 in terms of the Western Cape Gambling and Racing Act, offers fixed-odds bets on the outcome of an array of lotteries worldwide, including the South African National Lottery and various sporting events.[1] Lottoland’s competitors include other licensed bookmakers within the country such as Hollywood Bets, World Sports Betting and Betway, among others. Google, controlled by Google LLC, is a multinational technology company specialising in internet-related services and products, including search engines, online advertising technologies and more. Google is best known for its search engine and advertising platform, Google Ads, which is a key revenue driver for the company. Google Ads allows businesses to display advertisements on Google’s search engine results pages, partner websites and other platforms using a pay-per-clicks model where advertisers bid on keywords to reach targeted audiences. Businesses utilise this service to maximise visibility with the aim of gaining more customers.

In 2020 Google terminated Lottoland’s access to Google Ads, which Lottoland argued was without justification given that the other licensed bookmakers, providing like services, still had access to Google Ad Services. This termination caused financial harm to Lottoland, and it was argued to distort the competition in this very market that Lottoland operated with detrimental effect on options available to consumers. Google’s main argument was that Lottoland’s services contravene certain sections of the Lotteries Act and by granting them access to their Google Ads services, Google’s policies and reputation could be under scrutiny in a public light.

What is an Interim Relief Application?

An Interim Relief Application, in terms of by section 49C of the Competition Act, 89 of 1998 (“Act”), is a temporary measure sought to address an alleged prohibited practice and aimed to prevent serious or irreparable harm pending the outcome of a hearing.[2] “The Tribunal will only grant such relief if it is of the opinion that it is reasonable and just, having regard to the following factors:”[3]

  • The evidence relating to the alleged prohibited practice;
  • the need to prevent serious or irreparable damage to the applicant; and
  • the balance of convenience.

The Tribunal must make a summary assessment before granting such application and this assessment is only at a “prima facie level”.[4] The Tribunal has held that the three above steps must be applied holistically whilst balancing each factor against the other. In this regard “a weak case on say irreparable harm may be counterweighted by a very strong case on the prohibited conduct. And vice versa…”.[5]

In the event an interim relief order is granted, it operates for a period of six months from its date, or the conclusion of the hearing, whichever is earliest.

What is the prohibited practice?

The basis of Lottoland’s application was that Google had contravened sections 8(1)(d)(ii) and 8(1)(c) of the Act.[6] Section 8(1)(d)(ii) states that a firm may not engage in exclusionary acts, such as refusing to supply scarce goods or services to a competitor or customer, unless it can demonstrate that the technological, efficiency, or other pro-competitive benefits outweigh the anti-competitive impact of its actions, and providing the goods or services is economically feasible.[7] Section 8(1)(c) prohibits a dominant firm from engaging in an exclusionary act if the anti-competitive effect of that act outweighs its technological, efficiency or other pro-competitive gain.[8] The overarching element that must be proved in both instances is that there must be a showing of dominance by the firm within the market in question.

A showing of dominance

Google raised the argument that they are not dominant within the ‘advertising ecosystem’ which includes both online (Google Ads) and offline advertising (print media, billboards, television, etc.) However, The Tribunal took a more detailed approach to determine the specific market Google is operating in, while accounting for the market in which Lottoland and its competitors are advertising in. The Tribunal refused the idea that the market in issue is that of the broader ‘advertising ecosystem’ but it is rather the specific market of online advertising, and even more specifically, the market for online search and search engine marketing (“SEM”) markets. The Tribunal stated that the service of Google Ads operates within this specific market, and it was proven, prima facie, that Google is likely to be dominant in this market in South Africa. Thus, rejecting Google’s argument that they should be viewed as operating in the broader ‘advertising ecosystem’.  

Lottoland submitted that Google has a market share of more than 90% in the SEM market, measured by search volume, and states that such dominance is well-established as The Commission had stated that Google is “the monopoly provider of intent-based marketing and customer acquisition in SA…”.[9]

Section 8(1)(d)(ii) and 8(1)(c) of the Competition Act

Now that dominance is established, we can break down and analyse each element that needs to be proved in terms of this section. The first element involves a refusal to supply a customer. On the face of such scenario, Google has refused to supply Lottoland with their service of Google Ads as Google terminated Lottoland’s access. Google had argued that by allowing Lottoland access to such service there is a potential for criminal liability or other commercial risks. The Tribunal’s ultimate findings was that this argument lacked basis as Lottoland’s competitors were provided access, showing an inconsistent enforcement of Google’s “internal policies”. Furthermore, The Tribunal stated that there is insufficient evidence to suggest that Lottoland had contravened the Lotteries Act.

The second element of proof is that of scarce goods or services. It was indicated in eMedia that a scarce good or service is one that is i) impossible or prohibitively expensive to duplicate or ii) there are effective substitutes for the service.[10] In GovChat, The Tribunal explained that a ‘scarce’ good or service is one that “cannot be easily duplicated without significant capital investment.”[11] Google’s main argument rested on the fact that there are numerous alternatives to Google Ads, all of which are viable and pose significant competitive constraint on Google Ads. However, The Tribunal in this case concluded that SEM services cannot be easily duplicated without significant capital investment and there is no feasible substitute, thus, rejecting Google’s argument and establishing the scarcity of Google Ads.

Alongside the above elements, it must be shown that it is economically feasible for Google Ads to supply Lottoland with Google Ads services. Lottoland seeks nothing more than to have access to Google Ads, as do their competitors. This equitable access request, and as is the opinion of The Tribunal, would prima facie not be impractical or unfeasible, the continued access to Lottoland’s rivals being a determining factor. The fact that Google has supplied Lottoland with Google Ads for some time before terminating access also suggests that it is not economically unviable to do so again.

Once the above has been established, harm is presumed, and the onus would typically shift to the respondent to show that these harmful effects are outweighed by pro-competitive gains. The Tribunal found that Google had no competition-related rationale for their actions and thus, there conduct prima facie distorts competition in the downstream market without any pro-competitive of efficiency justification presented or argued by Google.

Our assessment above, whilst done in the context of Section 8(1)(d)(ii) is also relevant for purposes of Section 8(1)(c). The Tribunal concluded that for reason stated under the section 8(1)(d)(ii) discussion, Google has also violated the provisions of section 8(1)(c). Google’s conduct has a prima facie anti-competitive effect, distorting competition by not allowing Lottoland to expand within their market relative to their rivals. The conduct was not found to be outweighed by technological, efficiency or pro-competitive gain and Google had little to no arguments in this regard.

Application of section 49C(2) of the Act

Lottoland submitted that Google’s refusal to allow it to use Google Ads resulted in Lottoland’s customer registration rate dropping significantly. Lottoland supplemented this with a monetary amount of the revenue that they had suffered as a result of Googles refusal to supply their Google Ads service, which, up until the interim relief was ordered, was ongoing. The Tribunal concluded that this is prima facie evidence that, due to Google’s conduct, Lottoland have suffered ‘serious or irreparable damage’, meeting one of the three stages of section 49C(2) of the Act. Additionally, the preamble of the Act states the importance to “provide for markets in which consumers have access to, and can freely select, the quality and variety of goods and services they desire”, with the overarching purpose of promoting and maintain competition in the Republic for the ultimate benefit of the consumer. It is clear that Google’s conduct has limited the choice for end-consumers.

With reference to ‘the balance of convenience’, The Tribunal weighed up the harm suffered by each party if they were to grant/refuse the application for interim relief, pending a decision on merits and stated that if there is clear and non-speculative evidence that suggest, and to what extent, a party will suffer harm if the relief was not given, then such relief should be given. It was stated in eMedia that “whilst there will inevitably be disputes of fact”, the Tribunal should still take a robust approach on the evidence before it, and that “if there is a prima facie right, even one open to some doubt and well-grounded apprehension of irreparable harm if the relief is not granted and ultimately granted at a final relief stage, then the balance of convenience favours the grant of the relief.”[12]

The Tribunal concluded that Lottoland had made out a prima facie case of restrictive practices and well as the irreparable harm it has suffered, therefore the balance of convenience, as shown, favours granting of interim relief. The requirements of section 49C of the Act have been satisfied and there is a case for interim relief.

Key takeaways

This case highlights critical elements that The Tribunal considers when assessing prohibited practices and granting interim relief under the Act. For a prohibited practice, The Tribunal focuses on determining market dominance, the exclusionary nature of the conduct, and whether the anti-competitive effects outweigh any pro-competitive justifications. The Tribunal’s approach to market dominance was particularly noteworthy. Instead of accepting Google’s broad definition of the market as the ‘advertising ecosystem,’ The Tribunal adopted a narrower definition focusing on the specific market for SEM services. This refined approach allowed for a more precise assessment of competition dynamics, underscoring Google’s overwhelming dominance in the SEM market.

The Tribunal further scrutinised Google’s refusal to supply Lottoland and its inconsistent application of internal policies, emphasising the scarcity of Google Ads as a service and its critical role for businesses reliant on digital advertising. Regarding interim relief, the Tribunal assesses whether there is prima facie evidence of a prohibited practice, serious or irreparable harm to the applicant, and whether the balance of convenience favours granting relief. Notably, the Tribunal’s robust and detailed approach to evaluating dominance and harm provides a roadmap for future cases, emphasizing the importance of context-specific market definitions and balancing the interests of all parties involved. This case underscores the Tribunal’s commitment to protecting competition and consumer choice while maintaining fairness in digital markets.

Joshua Eveleigh, Managing Associate at Primerio International says:

“At its crux, this matter dealt with the weighing up of the alleged risks and reputational harm to Google against the claimed foreclosure of Lottoland in the downstream market. Importantly, the Tribunal clarified that its mandate is to pronounce on how conduct may distort competition in a market.

Hence, if there is prima facie proof of anti-competitive conduct which cannot be outweighed on a balance of convenience, an application for interim relief must succeed. This is a particularly noteworthy judgement for firms operating within regulated environments. In effect, a dominant firm will be hard placed to cut-off services to a customer if, for example, it does not have clear evidence that the customer engaged in unlawful conduct.”

[1] Western Cape Gambling and Racing Act 4 of 1996.

[2] Competition Act 89 of 1998 (the “Act”), sec 49C.

[3] The Act, sec 49C(2).

[4] eMedia Investments (Pty) Ltd SA v MultiChoice (Pty) Ltd and Another, Case No. 201/CAC/Jun22 (“eMedia”), para 93.

[5] GovChat (Pty) Ltd and Hashtag Letstalk (Pty) Ltd v Facebook, Inc and Others, Case No. IR165Nov20 (“GovChat”), para 160.

[6] The Act, sec 8(1)(d)(ii) and 8(1)(c).

[7] The Act, sec 8(1)(d)(ii).

[8] The Act, sec 8(1)(c).

[9] Competition Tribunal of South Africa, Lottoland South Africa (Pty) Ltd v Google Ireland Limited and Google South Africa (Pty) Ltd, Case No: IR191Mar23 (Reasons for Decision and Order), para 78.1.

[10] eMedia, para 129.

[11] GovChat, para 113.

[12] eMedia, para 83 and 95.

AfCFTA: An Injection For Intra-African Trade Or Just Another Ambitious Idea?

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By Jannes van der Merwe

The African Continental Free Trade Area (“AfCFTA”) agreement, currently entered by 55 African countries, came into operation on 30 May 2019 and thereafter officially lodged in 2021. The purpose of the AfCFTA agreement is to create a single market for the continent, allowing free flow of goods and services across the continent and boost trading position of Africa in the global market[1].

While it is important to take into consideration that any change requires time, the question remains whether the AfCFTA agreement will in fact inject a positive change into Africa’s economy and promote intra-African trade.

The World bank predicts an economic growth for Africa, albeit it substantially low, indicating that the projected growth for Sub-Saharan Africa is 3% in 2024 and by 4% in 2025 to 2026, with East Africa expected to grow by 2.2% in 2024 and West Africa to grow by 3.9% in 2024.[2]

In 2023, the World bank further stated that research shows that the AfCFTA could lift 50 million people in Africa out of extreme poverty by 2035 and expand incomes by USD 571 billion[3].

Africa has been preparing itself for a growth in the Economy and the competition that comes with this in the broader African economy, by increasing regulatory infrastructure to oversee intra-African trade, with the likes of COMESA[4] and the recently functional ECOWAS[5], together with an increase of regulatory provision within African jurisdictions.  ‘

However, despite the preparation and readiness for a nuclear increase of intra-African trade, various factors have been hindering the progress. Africa has been riddled with uncertainties, related to political unrest, rising conflict and violence, climate shocks and high debt distress risks[6]. This leaves market leaders cautious to invest in Africa, and African entities to trade over and across these uncertain jurisdictions.

Article 4 of the AfCFTA agreement states that the specific objectives of the agreement is to progressively eliminate tariffs and non-tariff barriers; progressively liberalise trade in services; cooperate on investments, IP and competition policy; cooperate on all trade-related areas; cooperate on customs matters and the implementation of trade facilitation measures; establish a mechanism for the settlement of disputes concerning their rights and obligations; and to establish and maintain an institutional framework for the implementation and administration of AfCFTA.

South Africa has taken a positive step in this direction, as trade under the AfCFTA commenced during January 2024 where South African entities can export on a duty free, or reduced duty, for certain products. The South African Revenue Services has implemented the AfCFTA agreement and reduced the tariffs for these products[7]. However, the responsibility remains on African entities to promote the benefits of AfCFTA by increasing the intra-African trade and making full use of the economic gain that stems from the AfCFTA agreement.

While Africa is hopeful for the positive incorporation of the specific objectives of AfCFTA and the potential economic boost that AfCFTA can incorporate, this will only come with time, cooperation by the various African jurisdictions and proper implementation of the AfCFTA agreement.

[1]See: https://www.eac.int/trade/international-trade/trade-agreements/african-continental-free-trade-area-afcfta-agreement.   

[2]See: https://www.worldbank.org/en/region/afr/overview.

[3] See: https://blogs.worldbank.org/en/trade/africa-pursues-free-trade-amid-global-fragmentation.

[4] Common Market for Eastern and Southern Africa.

[5] Economic Community of West African States.

[6] See fn. 2 supra.

[7] The reduced tariffs can be found at https://www.sars.gov.za/legal-counsel/secondary-legislation/tariff-amendments/tariff-amendments-2024/

Real-Life Monopoly in Zimbabwe

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Zimbabwe’s Supreme Court hears competition matter between CTC & Innscor

By Jannes van der Merwe & Joshua Eveleigh 

On 3 October 2024, the Supreme Court of Zimbabwe (“SCZ”) delivered a judgment in the matter of the Competition Tariff Commission v. Ashram Investments (Private) Limited, and Others, setting aside the order of the Administrative Court (“Court a quo”), which had previously set aside the order of the Competition Tariff Commission (“CTC”) (the appellant before the SCZ).

The decision by the CTC dates back to 2014, when the CTC rejected a merger application where Ashram Investments would obtain control of Profeeds and Produtrade. The CTC rejected the merger on the grounds that Profeeds and Ashram, which is wholly owned by Innscor, had shares in National Foods and Irvines (collectively referred to as “the Respondents”). The proposed merger was likely to give Profeeds and National Foods a monopoly in the stock feeds market. Subsequently, in 2015, the Respondents agreed to merge the entities and obtained 49% of the shares of the target entities, in an attempt to circumvent the regulatory framework.

By doing so, the Respondents obtained an increasing stake in the stock feeds market, where the vertically integrated Respondents operated together. Inscorr, through its subsidiary Irvines[1] and National Foods[2], operates in the stock feed market, spanning their activities over eggs, day old chicks and stock feed manufacturing. Profeeds is also in the market of manufacturing stock feed and poultry feed. [3]

The Respondents were advised to notify the CTC about the implemented mergers, which they did in 2019. The CTC investigated the matter and informed the Respondents, in terms of Section 31(5) of the Competition Act [Chapter 14:28] (“the Act”), that Ashram should divest from Profeeds and that the CTC would impose a penalty for the Respondents’ contraventions of the Act. The Respondents were given an opportunity to make representations regarding the CTC’s broad terms order.

The CTC held that the merger was not in the public interest and was likely to create a monopoly within the market, and that the Respondents failed to notify the CTC of the proposed merger as the Respondents surpassed the notifiable monetary threshold; accordingly, the CTC prohibited the merger. The Respondents appealed to the Court a quo, which upheld the appeal.

The CTC appealed the decision of the Court a quo to the SCZ on the principal grounds that the Court a quo’s findings were grossly unreasonable or irrational, and that it failed to determine that the merger was contrary to the public interest, resulting in a monopoly.

The SCZ opined that the Court a quo erred in allowing the merger. Further, the SCZ held that in terms of the Act, competition must be in the interest of the public and that parties must adhere to the provisions set out in the Act.

The SCZ considered the evidence indicating that, despite the short-term benefits that the Respondents might rely on, the Court a quo failed to consider the long-term effects of the proposed merger and the consequences that arise from a monopolistic enterprise.

The SCZ held that:

“Monopolistic tendencies must be carefully assessed because they may initially appear favorable, but in the long run, they may, when the monopolists get to the point where the market has no other option but to buy their goods, turn around and control even the economy of a country by producing highly priced goods or substandard goods sold at high prices.”

The SCZ relied on the Akzo matter where the COMESA Competition Commission had prohibited a monopolistic merger in Zimbabwe, where it was found that the merger of two strong paint brands would result in there being no effective competition in the market. The SCZ stated that:

“In the present case the court a quo ought to have upheld the prohibition of the merger taking into consideration the merging of Profeeds and National Foods which resulted in the concentration of industrial power in the two biggest companies in the stock feed industry. There are striking similarities between this case and the Akzo case”

This judgment has set a new precedent in Zimbabwe, reaffirming the sound principles set out in the Act and the consequences for parties who wish to jump the gun to circumvent legislation and regulatory authorities.

[1] https://irvinesgroup.com/our-offering/

[2] https://nationalfoods.co.zw/stockfeeds/

[3] https://www.profeeds.co.zw/products

Trouble in Store: New challenges for Shein and Temu devotees in South Africa

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By Nicole Araujo 

It is no secret that international e-commerce giants Shein and Temu — the “ultra-cheap, ultra-fast retail giants” — have become increasingly popular among the South African population. The entry of these affordable and efficient platforms has certainly given Takealot – the established market leader – a run for its money, sparking reasonable concern for its survival and that of other local players in the market. 

The Commissioner of the South African Competition Commission (“Commission”), Doris Tshepe, stated that “all tools of government” are needed to level the playing field in the e-commerce sector considering the entry of international industry giants such as Amazon, Shein and Temu. This call for action comes 14 months after the Commission’s Online Intermediation Platforms Market Inquiry Final Report (“OIPMI”), released in July 2023which identified Takealot as the market leader and holding a dominant share of over 35% of online transactions.

The South African e-commerce sector is growing quickly, demanding stronger competition regulation and government policies. The OIPMI focused on ‘then’ current market dynamics. The arrival of international players (who were not in the Commission’s scope at the time of the inquiry), however, now arguably requires a shift in regulatory focus. 

In the government’s efforts to curb the large volume of low-value imports from Shein and Temu, the South African Revenue Service (“SARS”) introduced a new tax regulation in September 2024. SARS’ intervention was based on the fact that domestic clothing retailers are required to pay 45% on imported clothes whereas international e-commerce retailers, as an alleged way to avoid higher import rates, segment large orders into smaller amounts to ensure they remain under R500.   In this regard, items are now subject to VAT, in addition to the 20% flat rate, even where items are less than R500. 

At this particular juncture, it is too early to gauge the impact of the adjustments on sales, however the implemented tax adjustments intend to address competition concerns by increasing costs for low-value imports, making it less advantageous for consumers to consistently choose Shein and Temu’s cheaper imports over local options. Takealot has, however, demanded greater intervention to ensure further fairness within the South African market. Takealot, therefore, proposes that international e-commerce players such as Shein and Temu set up local offices and distribution centres in South Africa. Implementing these proposals would require Shein and Temu to invest in local infrastructure, thereby leading to job creation and increased tax contributions in South Africa. This would ultimately establish equity in the market, aligning their operational costs and processes with those of local online retailers and reducing the cost advantage these companies currently enjoy by selling and shipping directly from abroad. Furthermore, Takealot has advocated for their international industry partners to collaborate with local businesses and open local bank accounts to ensure fair tax contributions. 

With the shift in the Commission’s focus from market dynamics to international players, South African fans of the two industry giants can expect further tax implications and regulatory changes which may impact their online purchases and decision-making.Additionally, the rapid developments in the industry and the Commission’s evolving approach to market assessments raise questions about the effectiveness of market inquiries and their findings.

In light of the Commissioner’s recent comments, it is expected that the Commission will keep a watchful eye on the industry and its international participants, particularly taking into account local player’s concerns. 

Ultimately, the Commission will aim to foster a more equitable playing field, ensuring the sustainability and competitiveness of South Africa’s local industry in an increasingly globalised market. For local retailers, there may be a positive shift in foreign-owned business tax contributions, while consumers could see a positive impact on the overall economy.

Joshua Eveleigh, an associate competition law attorney at Primerio International, notes:

“the explosive growth of Shein and Temu within South Africa also demonstrates an important concern associated with the Commission’s market inquiry regime. Specifically, the Commission looks to impose binding remedies on firms within dynamic markets. This creates an inherent risk that by the time the Commission does impose remedies on a firm, the market has already changed and the remedy becomes ineffective.”

In any event, it is clear that certain measures will be taken to maintain effective competition in South Africa. In doing so, however, the Commission should be cautious in not becoming a price or sector regulator.

New Book Alert: “Regulating for Rivalry: The Development of Competition Regimes in Africa”

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Book Launch Monday: CCRED’s latest covers AAT’s bread and butter, namely the rise of regulatory antitrust frameworks across the African continent.

The Centre for Competition, Regulation and Economic Development (“CCRED”) has announced the launch of its latest publication: “Regulating for Rivalry: The Development of Competition Regimes in Africa”. Co-edited by Reena das Nair, Simon Roberts, and Jonathan Klaaren, this book looks to be a comprehensive compilation of cutting-edge research and analyses, bringing together the key papers presented at previous ACER Week (Annual Competition and Economic Regulation) conferences. It also includes contributions from CCRED’s ongoing work, reflecting a rich exchange of ideas aimed at fostering competitive markets and effective regulation across the African continent. 

One of the notable contributions in the book is a paper written by Primerio’s John Oxenham, Michael-James Currie, and Joshua Eveleigh, titled “Buyer Power in Emerging Markets: Assessing the Effectiveness of Regulatory Enforcement Developments in South Africa and Kenya”. This paper delves into the complex dynamics of buyer power, particularly in emerging markets, and evaluates the impact of recent regulatory enforcement efforts in South Africa and Kenya. Their research provides critical insights into the challenges and successes of regulatory buyer power within these key African economies, offering valuable lessons for policymakers and regulators across the continent. 

“Regulating for Rivalry” will be available in both digital and print formats towards the end of 2024. The book is expected to be an essential resource for academics, regulators, legal practitioners, and policymakers engaged in the development and enforcement of competition law in Africa. It showcases the growing maturity and innovation of competition regimes across the continent, highlighting the critical role of effective regulation in promoting economic development and inclusive growth. 

Lots of C’s: CCC(C) investigates Coca-Cola Contracts in COMESA

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Coca-Cola is suspected of having engaged in anti-competitive conduct in the common market region via unlawfully restrictive distribution agreements — much is at stake, including a chance for the respondent to justify its contract provisions, and for the CCC to provide more detailed objective reasoning for its ultimate decision than it previously did in its 2018 RPM case against the soft drink giant.

By Joshua Eveleigh & Henri Rossouw

On 14 October 2024, the Common Market for Eastern and Southern Africa Competition Commission (“CCC”) announced that it will investigate The Coca-Cola Company (“Coca-Cola”) for potentially violating the current Article 16 of the COMESA Competition Regulations (the “Regulations”). The Regulations are due to be amended prior to year’s end.

The alleged conduct relates to supposedly restrictive bottler and distribution agreements considered to affect trade between COMESA Member States, thereby falling under the jurisdiction of the regional competition watchdog, akin to the European Union’s DG COMP enforcing antitrust rules across the EU.

Article 16 prohibits agreements that may affect trade between Member States of COMESA, with the main object of these agreements being to prevent, restrict, distort competition in the Common Market.  The present investigation provides an example of how one of the CCC’s primary objectives is the detection and prevention of any restrictions to trade in and across the Common Market, such as the suspected “absolute territorial restrictions” at issue here.  This is notably different from a prior run-in between Coca-Cola and the CCC back in 2017-2018: the CCC’s first soft-drink salvo dealt with so-called “Resale Price Maintenance” (“RPM”) in Coke’s distribution agreements. RPM is a generally frowned-upon practice in antitrust law globally. During that case, the then-still fledgling agency had issued a curt decision, resolving the case without fines but with an injunction against the practice and a mandatory Coke compliance programme.

This new matter arises out of entirely different legal issues and with a distinct factual background. Moreover, it is now being investigated by a notably matured and dramatically advanced enforcement agency compared to the 2018 case. Says Andreas Stargard, a Primerio attorney practising before the CCC:

“The Commission is doing what COMESA was designed for — a ‘territorial-restriction’ prosecution is nothing new for a regionally-integrated community. It lies at the heart of the concept of a unified, free market area. Territorial restrictions within such an area an inimical to the entire concept of COMESA. Just look at the EU: its antitrust rules have given the European Commission a similar mandate for decades, enforcing prohibitions against sellers’ territorial limitations that impinge on the free distribution and sale of their goods across the EU. Here, in the current COMESA investigation, it appears that we are notably dealing with restrictive conduct that may be justified by the parties in the end, as opposed to a pure prohibition ‘by object’, such as a cartel agreement. So if Article 16(1)-(4) applies, a prohibition with ‘rule-of-reason’ caveats, Coca-Cola may provide arguments as to why and how the restrictive agreements benefit end-consumers.”

Interestingly, the CCC previously assessed the distribution agreements between Anheuser-Busch InBev (“ABI”) and its third-party distributors and found that the distribution agreements contained clauses that restricted distributors from selling outside of their allocated territories, infringing upon the principle of “absolute territorial protection”. Accordingly, ABI remedied the infringing provisions. “The difference there, however, was that ABI had affirmatively and preemptively applied to the CCC for an authorization under Art. 20 — it was not the subject of an investigation after the fact, as is the case with Coca-Cola,” says attorney Stargard.

“Moreover, once the case is resolved, I am curious to see whether the CCC will take into account the prior compliance programme mandate from the 2018 case against Coca-Cola. It will be interesting to read whether or not the Commission refers to this condition of the prior non-fining resolution against Coke’s RPM conduct, and if so, where the failure point was? Was the programme either inefficient, entirely scrapped, or how did it otherwise fail to avoid further violative conduct on the part of the respondent…? We will have to wait and see, but other global enforcers, such as the DOJ, have certainly used the existence or non-existence of an effective compliance programme in their ultimate fining decisions to date.”

Regardless of outcome, it will also be interesting to learn how the CCC approaches the topic of exclusive distribution agreements across the Common Market. In this regard, it is widely accepted that exclusive agreements are likely to give rise to a range of efficiencies that may be passed down to customers and end-consumers, which Coca-Cola will, of course, need to establish by objective economic evidence if it seeks to justify its contracts vis-à-vis the CCC.

The CCC has been known to be deliberate and fair in its proceedings, especially in recent years of maturity and advancements in its team strength and econometric evaluation capabilities. Mr. Stargard observes that “[e]xamples of this nuanced approach and the due process being granted to parties in distribution cases include the most recent CAF soccer cases (see, e.g., here), in which the CCC spent extensive time and clarifying documentation on why certain, but not all, practices of the affected parties were harmful to consumer welfare in the Common Market.” That said, if the CCC were to adopt an overly protective stance here, however, it may have a concomitant effect on the consumer welfare and will have significant consequences for multinationals distributing into Africa.

The case is still in its investigatory phase, and thus all interested stakeholders are invited to submit representations by 14 November 2024 and can enquire further from Mr. Boniface Makongo (Director Competition Division) at +265 (0) 111 772 466 or at bmakongo@comesacompetition.org.

Eswatini’s new chief antitrust enforcer hails from COMESA body

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AAT notes that Eswatini, a member nation of COMESA, has appointed its new Director of Competition and Consumer Protection at the Eswatini Competition Commission (“ESCC”), namely Ms. Siboniselizulu Simelane Maseko. According to the Commission, her background in economics and law will help ensure the agency is prepared for continuing its path ‘towards fairer markets and consumer welfare’. Her previous role within the ESCC as an analyst, and senior analyst, and her experience at the COMESA Competition Commission are set to equip her to spearhead the ESCC’s efforts to maintain a competitive and transparent market environment within eSwatini.

“The Commission’s portfolio has expanded since I left. We now have a Policy and Research Department as well as a fully staffed Consumer Protection Department. With young, energetic teams, the commission is well-positioned to support the national development goals and positively impact Eswatini’s economy.”

In her new role, Maseko will oversee competition enforcement, mergers and consumer protection. She emphasizes the importance of preventing anti-competitive outcomes and promoting innovation to safeguard economic stability.

Eswatini’s economy is facing several structural challenges, including slow growth, high unemployment, poverty, and fiscal pressures. While there are opportunities for improvement through reforms and diversification, the country needs to address both domestic and external challenges to achieve sustainable economic growth in the long run. The recent appointment of leaders like Maseko to impactful regulatory roles may signal a focus on creating a fairer, more competitive economic environment, which could contribute to long-term recovery and growth.

Maseko’s international experience, including her exposure to African regional competition authorities and work with global regulatory bodies, positions her well to drive the ESCC’s competition law policies. She has underscored the need for robust enforcement mechanisms and active collaboration with regional and international bodies such as COMESA and the African Continental Free Trade Agreement (“AfCFTA”) to foster fair competition practices.

“I have had the privilege of working with enforcement agencies beyond the COMESA region, including those from South Africa, the European Commission and the United States. These networks are crucial, particularly as the Commission participates in regional and continental competition enforcement initiatives.”

Observers of Eswatini’s regulatory landscape note that her leadership, and the support by a talented team, is set to bolster the ESCC’s efforts in ensuring markets remain fair and beneficial to consumers while encouraging business innovation.

Says Andreas Stargard, a competition practitioner with Primerio, “I know Siboni from her longe time working at the COMESA Competition Commission, where she assisted greatly in getting that agency off the ground, helping Willard Mwemba and his staff to catapult the CCC from a fledgling entity to an antitrust enforcer one must reckon with across Africa. This experience will be of value to Siboni’s coming leadership in Eswatini, and I wish her the best!”

Ms. Maseko echoed the description of her career trajectory in her statement: “After having been at regional level for 8.5 years, I have come full circle – back to where I started my journey as a young analyst in 2011. I’m delighted by the opportunity to share what I’ve learnt at regional level and support the Commission’s mandate to contribute to economic growth through fair competition!”

More Regional Antitrust: Competition law in West Africa at the hands of ECOWAS

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After the successful launch (and by now, first decade) of its Eastern regional counterpart, the COMESA Competition Commission, as of today, West Africa’s ECOWAS body likewise boasts a supra-national antitrust enforcement regime. AAT will be following its path closely.

By Jannes van der Merwe

The Economic Community of West Africa States (“ECOWAS”) was established by fifteen West Africa countries (“member states”) in 1975 when the member states signed the ECOWAS Treaty, with the aim and objectives to maintain and enhance economic stability and development in Africa.[1] The member states signed the revised treaty in 1975, currently governing the member states.

The current member states are Benin, Burkhina Faso, Cabo Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sieera Leone and Togo.

Authority Established in 2008

In 2008 ECOWAS implemented two pieces of legislation through the authority of the treaty to steer the competition framework within the member states. The first was the Supplementary Act A/SA.1/12/08, and the second Supplementary Act A/SA.2/12/ 08.

Supplementary Act A/SA.1/12/08:

The purpose of this piece of legislation (known as the Community Competition Rules) nutshell is to promote competition, enhance economic efficiency, prohibit anti-competitive conduct that restricts or distorts competition, ensure consumer welfare and to expand opportunities for domestic enterprises of the member states. [2]

Supplementary Act A/SA.2/12/ 08:

The purpose of this piece of legislation was to establish a regional body to be known as the ‘ECOWAS Regional Competition Authority’ (“the Commission”) to govern, oversee and implement the Community Competition Rules.

The Commission

The formal launching of the Commission took place in May 2019. In December 2021, together with further enactment of legislation, the Council of Ministers of ECOWAS amended Supplementary Act A/SA.2/12/ 08 to, inter alia, enhance article 2, governing the bodies of the ERCA[3].

The amendment established two formal bodies of the ERCA, being the Council and the Executive Board of the ERCA, together with the Executive Directorate who is the administrative, investigative and implementing body of the Council’s decisions[4].

On 2 October 2024 the newly elected Council of the Commission will be sworn in at Banjul, the capital of the Republic of Gambia. See photo below.

This event will mark the dawn of a new day for competition in West Africa, whereby the Commission, through the Council, will become fully functional in order to administrate and give effect to the Competition Rules to member states.

Legal Framework

The Commission, through the Council, will be able to give effect to the preamble of the Treaty and align a vitally important piece that was missing from the practical application of the treaty.

The Community Competition Rules will be the governing legislation providing the umbrella under which the Commission will operate.

During December 2021, the Council of Ministers for ECOWAS further enacted regulations to govern the rules and procedures to give effect to the articles of the Community Competition Rules established in 2008.

A brief description of all the relevant legal framework will be discussed below.

 The Competition Community Rules

The Competition Community Rules will regulate, inter alia, Agreements and Concerted Practices in Restraint of Trade; Abuse of Dominant Position; Mergers and Acquisitions; State Aid; Public Enterprises; Compensation for Victims of Anti-Competitive Practices; Authorisation and Exemptions; Agreements Concluded by Member States and the Application and Implementation of the Community Competition Rules[5].

ERCA’s Rules of Procedure in Competition Matters

Regulation C/REG.24/12/21[6] was established to set out the rules and procedures of the ECRA in competition matters and by doing so, harmonising competition laws, procedures, cooperations, investigations, exchange of information, decision making, enforcement, sanctions and compensation[7].

Supplementary Act A/SA.3/12/21

The amended act’s new article 3 provides a positive duty on the Commission to represent ECOWAS wherever necessary in matters of competition and consumer protection[8].

Mergers and Acquisitions in ECOWAS

Regulation C/Reg. 23/12/21[9] was established to set out the rules and procedures for mergers and acquisitions.

This regulation requires that merging parties of member states that meets the threshold will have to obtain prior approval before implementing. The merger threshold is governed by enabling Rule PC/REX.1/01/2024[10]

Leniency and Immunity Proceedings in Competition within ECOWAS

Regulation C/REG.22/12/21[11] was established to set out the rules, conditions and procedures of leniency and immunity applications to the Commission. Simultaneously, this regulation is a guide to the Commission in the exercise of its investigative and prosecutorial discretion in illegal cartels who, through their cooperation, help to reveal Cartel conduct[12].

Regulation C/REG.22/12/21 is accompanied with enabling Rule PC/REX.1/01/24[13] containing the manual for leniency and immunity applications and what leniency and immunity the Commission may grant for enterprises of member states which are engaged in anti-competitive behavior and who voluntarily disclose information to facilitate the Community Competition Rules.

Final Word

The operational ECOWAS Regional Competition Authority and the implementation of a functioning Council for the ECOWAS Regional Competition Authority is a leap forward in the West Africa competition sphere and will protect enterprises and enhance competition within the West Africa markets, providing benefits for entrepreneurs, enterprises and consumers.

[1] Article 3, ECOWAS Revise Treaty, 24 July 1993 (‘the treaty;’).

[2] Supplementary Act A/SA.1/12/08, Article 3.

[3] Supplementary Act A/SA.3/12/21 Relating to the Amendments of Supplementary Act A/SA.2/12/08.

[4] Article 2(new), Supplementary Act A/SA.3/12/21 Relating to the Amendments of Supplementary Act A/SA.2/12/08.

[5] Article 5-13, Supplementary Act A/SA.1/12/08.

[6] Regulation C/REG.24/12/21 on the ERCA’s Rules and Procedures in Competition Matters.

[7] Article 3, Regulation C/REG.24/12/21 on the ERCA’s Rules and Procedures in Competition Matters.

[8] Article 3(new), Supplementary Act A/SA.3/12/21 Relating to the Amendments of Supplementary Act A/SA.2/12/08.

[9] Regulation C/Reg.23/12/21 on the Rules of Procedure for Mergers and Acquisitions in ECOWAS.

[10] Enabling Rule PC/REX.1/01/24 on Manuals of the Procedures of the ECOWAS Regional Competition Authority.

[11] C/REG.22/12/21 on the Rules on Leniency and Immunity Procedures in Competition within ECOWAS.

[12] Article 1, C/REG.22/12/21 on the Rules on Leniency and Immunity Procedures in Competition within ECOWAS.

[13]  Enabling Rule PC/REX.1/01/24 on Manuals of the Procedures of the ECOWAS Regional Competition Authority.

Insular Africa: Mauritius provides Antitrust Updates

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The Mauritius Competition Commission published the 6th issue of its newsletter, dealing with the latest activities of the Commission over the past year (June 2023 – July 2024)

By Jannes van der Merwe

The Commission has undertaken a significant number of developments in the past few months, in order to increase its activity and enforcement as well as advocacy work. Most notably, the Commission has contributed to the Protocol on Competition Policy under the African Continental Free Trade Area; hosted Professor Alan Fels for three days helping the Commission with capacity building where he shared his experiences and discussed how to better enforce the law and challenges faced by the Commission; hosted Professor Pierre Régibeau to lecture, contribute and advise the Commission on various topics such as merger control, abuse of dominance, IP and competition law; the commission has been elected as the Chair of the African Competition Forum; and the Commission has been appointed as the Co-Chair of the International Competition Network Merger. Working Group, attending to educational outreaches, all while managing the competition activities within Mauritius. [1]

The Commission has made headway on several critical investigations within the Mauritian economy.

  • The Executive Director has completed its investigation in the merger of two major suppliers of snacks and drink through automated vending machines and has submitted the report for the Commission’s decision.[2]
  • The Commission completed its ports market study, led by John Davies.[3]
  • The Commission is continuing its investigation into possible cartel conduct with Third-Party Liability on Contractor’s All Risk Insurance.[4]
  • The Commission is continuing its investigation into a possible cartel, price-fixing the wholesale markup of pharmaceutical products.[5]
  • The Commission is investigating possible anti-competitive behaviour by TNS Tobacco, an importer and distributor of British American Tobacco’s brands.[6]

Completed Market Investigations

Acquisition of Engen Ltd by Vivo Group:

After the acquisition by Vivo Energy of the shares held by Engen Holding in different Engen entities in several countries, including Zimbabwe, Zambia, Gabon, Rwanda, Mozambique and other African countries in recent times, Vivo Energy turned its eyes to South Africa.

This in turn, caused the Commission to commence an investigation into the possible competition concerns the transaction between Vivo Energy and Engen Limited (South Africa) in South Africa could raise in the Mauritius’ fuel market. The Commission’s investigation found that the transaction in South Africa raises competition concerns as Engen Limited owns and operates Engen Petroleum Limited in Mauritius, while Vivo Energy competes in the Mauritius Fuel Market through its vertical integration.

The transaction that the commission then had to consider entailed the acquisition of Engen Limited (“Engen Mauritius”) by Vitol Emerald Bidco (PTY) Ltd, who is controlled by Vitol Holdings through Vitol Africa B.V. Vitol Holding proposed to transfer Vitol Emerald Bidco to Vivo Energy Emerald Holding B.V, who is part of Vivo Energy Limited.

Vivo Energy Limited has stakes in Vivo Energy Mauritius who trades under the name of Shell, a competitor to Engen Mauritius.  The commission’s concern with all of the above was that effectively, the Mauritian fuel market will be transformed from 4 dominant players to 3.

This resulted in the parties’ providing undertakings to the Commission to ensure that the fuel market in Mauritius remains competitive, which the Commission accepted as the conditions to the agreement. [7]

The parties agreed that a separate divestment business will acquire Engen Mauritius, subject to the terms as per the merging parties’ undertakings which include the majority of Engen Mauritius’ business, excluding 7 filing stations and various contracts related to the commercial operation between Engen and Vivo Group.[8]

Read more of the Mauritius Competition Commission’s news here.

[1]The Competition Commission, Competition News, Issue 6, August 2024.  https://media.licdn.com/dms/document/media/D4D1FAQFYxpZFjAS5JQ/feedshare-document-pdf-analyzed/0/1725357604620?e=1726704000&v=beta&t=f-zCi3QZ4siJdvpTtzgoGSlgFvXwUeCovjxQYtfO0Ks

[2] News letter, page 12.

[3] News letter, page 13.

[4] News letter, page 13.

[5] News letter, page 14.

[6] News letter, page 14.

[7] The Government Gazette of Mauritius, General Notice No. 668 of 2024, 1 June 2024.

[8] The Competition Commission, Competition News, Issue 6, August 2024. page 12.