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SOUTH AFRICA: EXEMPTIONS TO AID CONSUMERS DURING AND AFTER RIOTS

By Charl van der Merwe and Gina Lodolo

On 15 July 2021, Ebrahim Patel, the Minister of Trade Industry and Competition, published a block exemption for the supply of essential goods (“Exemption”), which came into effect on the day of publication and is granted until 15 August 2021, unless extended or withdrawn.

The Exemption is aimed at allowing conduct that would usually fall foul of Section 4 and 5 of the Competition Act 89 of 1998, as amended (“Act”) due to the conduct being a restricted horizontal (conduct between competitors) or vertical (conduct between suppliers and customers) practice.

The authority to grant exemptions is derived from section 10(10) read with section 78(1) of the Act. Section 10(10) of the Act states that the “Minister may, after consultation with the Competition Commission, and in order to give effect to the purposes of this Act as set out in section 2, issue regulations in terms of section 78 exempting a category of agreements or practices from the application of this Chapter”.

These specific Exemptions were granted in light of the recent riots in South Africa, which have caused massive losses at retail level as well as supply chain shortages and disruptions.  The purpose of the Exemption is to prevent a shortage of essential goods within South Africa, especially to poorer households and small businesses. These Exemptions apply to suppliers of essential goods. Essential goods are defined to mean: “basic food and consumer items, emergency products, medical and hygiene supplies (including pharmaceutical products), refined petroleum products and emergency clean-up products. Essential goods include the final good itself as well as all inputs in the supply chain required for the production, distribution and retail of the essential goods” (“Essential Goods Suppliers”).

The Exemption provides that Essential Goods Suppliers may communicate and coordinate with each other to ascertain the loss of stock, the gravity of shortages and their location as well as availability of stock in particular areas to gauge the ability of different Essential Goods Suppliers to supply to areas that are experiencing shortages and have a higher demand, including supply to smaller businesses.

Essential Goods Suppliers may also coordinate on inputs, stock expansion or capacity and equitable distribution between Essential Goods Suppliers. Coordinated distribution of essential goods to different geographical areas within South Africa will be allowed if connected to anticipated shortages of a type of essential good or an anticipated shortage of essential goods in a specific area.

The Exemption contains express provisions to monitor all conduct in terms of the Exemption. Essential Goods Suppliers must keep minutes of all meetings and communication and such minutes, as well as written records of agreements must submitted to the Competition Commission.

The Exemption will provide welcomed relief but is not without risk. Communications between competitors as well as customers/suppliers pose various difficulties not only from a competition law perspective, but also from a commercial perspective. Conduct and exchanges of information in terms of the Exemption may have lasting consequences. It is imperative that firms are fully aware of the perils of so engaging in terms of the Exemption, particularly regarding meeting minutes and the positive duty, in terms of case precedent, to distance yourself from potentially anti-competitive conduct.

Finally, the Exemptions do not allow price-fixing and collusive tendering, nor do they authorize discussions on pricing of essential goods. Firms should be aware that price-gauging is still prohibited in terms of the Consumer and Customer Protection and National Disaster Management Regulations and Directions issued on 19 March 2020.

Primerio Director, Michael-James Currie, says that the Commission published a report following the exemptions granted during the Covid-19 State of Disaster confirming the positive effects that collaboration between competitors can have in certain instances. This calls into question whether the “characterization” test ought to be recognized as a substantive defence to hardcore cartel conduct cases in South Africa.

These Exemptions can be accessed at: https://www.gov.za/sites/default/files/gcis_document/202107/44854gon616.pdf

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Webinar Alert: Zambian Competition Law Enforcement Trends and Due Process

Join Primerio director Michael-James Currie and Primerio’s Zambia in-country partner Mweshi Mutuna, when they speak to the head of the Zambian CCPC’s restrictive practices division, James Chalungumana on 23 June 2021 at 3pm CET.

Registration is free. Follow the links below to register.

https://lnkd.in/dPifc67

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Nigerian Competition Law: FCCPC Publishes Penalty Guidelines

By Michael-James Currie and Jemma Muller

Nigeria is quickly emerging as one of the more important antitrust regimes on the African continent. Not only because it is a significant market, but largely due to a raft of recent legislative developments. The Federal Competition and Consumer Protection Commission (“FCCPC”) has been formally established and is fully operational with the legislative tools to tackle and prosecute the traditional spread of competition law violations including restrictive horizontal practices, abuses of market power and conduct robust analysis in relation to its merger control regime.

The most recent publication by the FCCPC is its Administrative Penalties Regulations, 2020 (“Penalty Regulations”). The publication of these Penalty Regulations not only serve as stark reminder of the risks of non-compliance with the competition laws but also signals the start of an active enforcement regime.

The Penalty Regulations provide for a largely mechanical calculation for purposes of quantifying an administrative penalty. In essence, however, the Penalty Regulations provide for a prescribed “base amount” (which is either fixed fee or calculated as a percentage of turnover) and this base amount is increased (or decreased) based on aggravating and mitigating factors as well as taking the duration of the infringement into account.

Importantly, the penalties are calculated with reference to annual turnover. This is not qualified by local or Nigerian derived turnover only. There is a risk that when calculating administrative penalties a firms’ total worldwide turnover is taken into account. This poses a significant risk for foreign entities who might only have a relatively negligible presence in Nigeria but are significant players on the global market.

Failure to notify a mandatorily notifiable merger (i.e., gun-jumping or prior implementation) attracts a base penalty of 2% of the parties’ annual turnover. This includes a pure foreign-to-foreign merger (i.e. where parties are domiciled outside of Nigeria) but have a nexus to Nigeria by virtue of having a subsidiary in Nigeria or derive turnover in or from Nigeria.

The good news for foreign firms is that parties to a foreign-to-foreign merger (or to a merger which raises no overlapping business relationships) may apply to have their transaction assessed under an expedited review regime. The expedited regime envisages reducing the review period of a phase 1 merger by up to 40%. It is advisable to engage the FCCPC by way of the pre-merger consultation process in order to confirm whether a proposed transaction qualifies for an expedited review.

Over and above administrative penalties, firms operating in Nigeria should also note that the FCCPC has the powers to pursue criminal prosecution against firms and individuals who violate certain provisions of the legislation. These include provisions dealing with, inter alia, price fixing, conspiracy, bid-rigging, obstruction of an investigation or inquiry of the Commission, providing false or misleading information, the failure to give evidence or appear before the Commission, and the failure to comply with a compliance notice or order issued by the Commission.

Like most jurisdictions which adopt a new, novel or revamped competition law regime, there are several aspects of Nigeria’s legislation which would benefit greatly from precedent. But in relation to the primary obligations of firms operating in Nigeria, the fundamentals are clear and the consequences for contraventions are of sufficient import to ensure that Nigeria is placed on the compliance radar.

[Michael-James Currie is a partner at Primerio and specializes in competition law in several African jurisdictions including Nigeria. Please feel free to get in touch with Michael-James by sending an email to m.currie@primerio.international]  

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SOUTH AFRICA: SMALL MERGER NOTIFICATIONS: THE SACC JOINS THE EUROPEAN COMMISSION IN EXPANDING THE APPLICATION OF SMALL MERGER NOTIFICATIONS TO ‘DIGITAL MARKETS’

Charl van der Merwe (Primerio, South Africa) Laura Roßmann (Gleiss Lutz, Germany)

Introduction

The South African Competition Commission (“SACC”) recently published amended draft guidelines for notification of small mergers in “digital markets” (“Digital Merger Guidelines”).

The Digital Merger Guidelines seek to amend the SACC’s existing guidelines on small merger notification and marks a significant change to the assessment of mergers in South Africa.  Judging from past experiences, the Digital Merger Guidelines are unlikely to be changed significantly, before being made final.

Background to Digital Merger Guidelines

Competition discourse in recent years have been largely centered around the regulation of digital markets. Various agencies internationally have considered and introduced different mechanisms of dealing with the perceived dangers of digital markets.

Similarly so, the SACC also recently shifted focus to the regulation of digital markets, starting with its informal study and report, titled “Competition in the Digital Economy” (“Report”). 

The Report, although informal and non-binding, now effectively serves as the SACC’s framework for the future regulation of digital markets. In this regard, the Report identified various market characteristics which, the SACC believes, warrant deviation from the traditional approach to competition regulation in South Africa. For current purposes, this includes most notably:

  • concentration arising from first-mover advantage, data accumulation and network effects (so called “tipping markets”), which necessitates pro-active intervention; and
  • merger notification thresholds which, currently, allow most mergers in digital markets to be implemented, without competition scrutiny, as they are primarily turnover or asset based, meaning that the acquisition of various small startups who, individually, are insignificant and do not trigger the thresholds, are collectively important (“creeping mergers”).

This is also a stated objective in the Digital Merger Guidelines, which state that: “There are concerns that these potentially anti-competitive acquisitions are escaping regulatory scrutiny due the acquisitions taking place at an early stage in the life of the target before they have generated sufficient turnover that would trigger merger notification as set by the turnover thresholds”.

The potentially harmful effects of ‘creeping mergers’ and ‘killer acquisitions’ are well documented. The SACC has, however, gone one step further to include, in its definition (informally), transactions which are significant internationally (such as Facebook’s acquisition of WhatsApp), but which do not meet the thresholds in South Africa. In this regard, the SACC also cites the Google/Fitbit merger, which was not notifiable in South Africa, but which the SACC insisted must be notified.

It is necessary to note that the recent amendment to the Competition Act already introduced the concept of ‘creeping mergers’ into South African merger control. In this regard, the Competition Act, as amended, require the SACC to assess:

  • the extent of ownership by a party to a merger in other firms in a related market;
  • the extent to which a party to the merger is related to other firms in related markets, including through common members or directors; and
  • any other mergers engaged in by a party to a merger for a period to be stipulated by the Commission.

While these provisions have not yet been fully put to the test, it seems evident that these provisions aid only in ensuring a ‘holistic consideration’ of the potential effects of a notifiable merger, they fall short in dealing with the identified concerns in the digital economy – being non-notifiable mergers.

Small Merger Notifications South Africa

Small merger notifications are not novel. Competition agencies, including the SACC, have in various forms, reserved the powers to assess transactions which do not meet the statutory merger thresholds. In South Africa, this was done through the publication of the SACC’s Guidelines on the notification of small mergers (“Guidelines”). The Guidelines required that small mergers be notified, voluntarily, where a party to the proposed transaction was under investigation by the SACC or a respondent to complaint proceedings before the Competition Tribunal.

The intention and rationale were clear, where a party was under investigation (or prosecution) for having engaged in anti-competitive conduct, the proposed transaction had to be assessed to consider whether the proposed transaction may harm competition (or the pending case under investigation/prosecution). Put differently, there was a clear and pre-defined potential harm.

The Digital Merger Guidelines seek to extend the application of the Guidelines to require the notification of small mergers where a party to the transaction “operate in one or more digital markets(s)” and any of the following thresholds are met:

  • the purchase consideration exceeds R190 million, provided the target has activities in South Africa;
  • the purchase consideration is less than R190 million (e.g. the acquisition of 25% shareholding), but the target value (100% shareholding) exceeds R190 million, provided the target has activities in South Africa and the acquisition amounts to a merger (change of control);
  • at least one of the parties to the transaction has a market share of 35% or more in at least one digital market; or
  • the merger results in the merged entity being ‘dominant’ in the market (as defined in the Competition Act).

Small mergers are to be notified by way of a “letter” (as opposed to the statutory merger filing forms).  Further in terms of the Digital Merger Guidelines, the letter must contain, “sufficient details” regarding: the parties; the proposed transaction; and the markets in which the parties operate.

Most notably, the transaction is not limited to the ‘relevant market’ for purposes of the competition assessment but may include related markets.

Small Mergers in the EU and Germany

The European Commission (EC) has also recently published guidance on the application of Article 22 of the European Merger Regulation (ECMR) in order to, inter alia, tackle mergers concerning digital markets, which fall short of the merger filing thresholds at both EU and Member States level. Article 22 of the ECMR allows for the referral of a transaction, which “threatens to significantly affect competition”. In such cases, the EC may ‘invite’ Member States to request a referral of the merger from national level to the EC, resulting in a notification at EU level, even if the transaction does not fulfil neither the EU nor the respective national turnover thresholds. This may further result in an uncertainty for the undertakings concerned as to whether their proposed transaction is to be notified and assessed by the EC.

Interestingly, the guidance on the Application of Article 22 ECMR only includes a “reappraisal of the application”, as the European Commission puts it, as the current wording of Article 22 ECMR already includes a referral mechanism for transactions not fulfilling the merger control thresholds in the respective Member State. This, however, did not play any role in the EC’s referral practice up to date.

The EC’s guidance now seeks to change its practice, particularly to aim at the prevention of so-called killer acquisitions in the digital economy – where potentially problematic transactions are not notified due to target thresholds not being met. The continued role and effectiveness of merger thresholds, particularly in relation to the digital economy, has long been debated in the EU. This is especially true, as the already mentioned Facebook/WhatsApp merger (used as a case in point by the SACC in its Report) was only notified with the EC after referral requests of some Member States based on Article 22 ECMR, as the merger fell short of the EU turnover thresholds, and most national thresholds.

To address this, some Member States, especially Germany and Austria introduced a “transaction value”-merger threshold, to ensure the notification of transactions involving a start-up ‘unicorn’ not (yet) achieving a substantial turnover. This threshold, inter alia, requires a filing based on the “consideration of the transaction”, usually being the purchase price, exceeding a certain threshold. However, this novella in 2017 did not result in any significant increase in merger filings. In Germany, less than 10 (of roughly 2000) mergers per year were notified based on this new provision. Further, it remains unclear whether a threshold based on the target’s purchase price is, indeed, better placed to evaluate the parties’ market position. This is especially true when considering that none of the mergers notified under this provision entered the so-called 2nd phase, meaning that all such mergers were cleared (or withdrawn by the parties).

In light of the above, the EC guidance highlights a few important considerations relevant to the South Africa Digital Merger Guidelines:

  1. the EC guidance notes that the ‘transaction value’ thresholds, which had been introduced in Germany and Austria, as said, do not appear to be effective; and
  2. with the increased number of merger filings likely to follow under the new guidelines, it is necessary to ensure a balanced approach, through the implementation of measures to ensure the “simplification of merger procedures”.

Conclusion

Small mergers are not mandatorily notifiable. The Competition Act does, however, provide that the SACC may, within six months after the transaction has been implemented, require the transaction to be notified.

This SACC’s powers in terms of section 13(3) of the Act is discretionary. In this regard, the SACC may call for a merger to be notified where, in the view of the SACC, the merger may substantially prevent or lessen competition or cannot be justified on public interest grounds.

The inclusion of specific provisions in the Digital Merger Guidelines suggest, by necessary implication, that mergers in the digital market may substantially prevent or lessen competition or importantly, negatively impact public interest.

Defining the relevant competitive theory of harm in the digital economy is notoriously difficult. It is notably, however, that in terms of the Competition Act, as amended, public interest considerations (and by implication ‘national interest’) have been elevated to a separate and self-standing assessment. Public interest, in this context, includes most notably the “ability of small and medium businesses or firms controlled by historically disadvantaged persons to effectively enter into, participate in or expand”.

Accordingly, the South African merger control framework, as amended, provide the SACC with a unique ability to assess mergers in the digital market on grounds other than pure competition grounds.

In a separate but related issue, the SACC have initiated a market inquiry into the market dynamics in online intermediation platform – which is seen to be an ‘emergent market’ in South Africa and the SACC considers effective competition between these platforms to be key to digital expansion. In doing so, the SACC already signaled a clear intent to focus its assessment of digital markets on the less complex assessment of creating a space for small business to enter and operate. Furthermore, the insights which the SACC can gather through the less adversarial market inquiry, is likely to provide it with the valuable insights, which it may then apply to its merger assessments.

The SACC’s unique ability to consider expanded ‘public interest’ consideration in merger control, coupled with the SACC’s clear intention to require the notification of all mergers in the digital market, including small mergers, pose a significant risk to firms operating in the digital market.

Concerns regarding the SACC’s Digital Merger Guidelines are exacerbated by the fact that these guidelines have failed to account for important issues, highlighted in the EC guidance (or addressed some of the perceived failures of the EC guidance). In this regard, it has failed to provide sufficient clarity regarding a simplified process to be followed in respect of such small mergers. Moreover, the Digital Merger Guidelines may add uncertainty to transacting parties, internationally, without any appreciable benefit to competition.

This risk in relation to the Digital Merger Guidelines is not unique to South Africa. Similar ambiguity already exists in the EU with the application of the “new” Article 22 ECMR.  It may be safe to assume that any transaction filed in the EU on a ‘cautionary basis’, which may have a jurisdictional nexus to South Africa, ought similarly to be notified in South Africa, in terms of the Digital Merger Guidelines (once finalized).

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South Africa’s Price Discrimination Provisions: Interpretational Guidance to Section 9

African focused competition lawyer and regular contributor to Africanantitrust, Michael-James Currie, has kindly made available to all Africanantitrust readers his dissertation titled “SOUTH AFRICA’S AMENDED PRICE DISCRIMINATION PROVISION: AN ANALYTICAL FRAMEWORK IN RELATION TO THE GROCERY RETAIL MARKET”.

In his thesis, Currie explores various economic and legal principles which are of particular relevance to ensuring that section 9 of South Africa’s Competition Act is interpreted in a manner which is sensible and does not lead to unintended consequences which might harm consumers or dampen pro-competitive conduct.

Currie utilises the grocery retail market as a basis to explore the applicability (and suitability) of the price discrimination provisions in so far as the objective to protect a specific class of competitors is concerned (rather than protecting competition).

By drawing on economic principles and European and US precedent, Currie provides a well articulated and reasoned analytical approach to section 9 coupled with practical interpretational guidance in what is likely to become a very useful resource.

To access Currie’s dissertation (for free), please follow the link below:

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South African Competition Appeal Court Upholds Tribunal’s Excessive Pricing/ Anti-Price Gouging Decision re Babelegi

By Michael-James Currie

[Michael-James is practicing attorney and recognized by Best Lawyers South Africa for competition law/antitrust. He can be contacted at m.currie@primerio.international]

In June 2020, the South African Competition Tribunal (Tribunal) handed down two seminal decisions (Babelegi and Dis-Chem) in relation to “excessive pricing” during the Covid-19 pandemic. The Tribunal found that both respondents had engaged in excessive pricing in relation to the sale of facemasks.

Together with John Oxenham and Charl van der Merwe, we authored an article for the Oxford Journal for European Competition Law and Practice titled COVID-19 Price Gouging Cases in South Africa: Short-term Market Dynamics with Long-term Implications for Excessive Pricing Cases. In the Article, we examined several aspects of these cases and concluded that it was highly unfortunate that these cases were the “test” cases not only as the first (and to date only) contested price gouging cases in South Africa, but more importantly they also the first excessive pricing cases to be assessed under South Africa’s amended excessive pricing provisions (which came into effect in February 2020).

Our primary concerns were that while the Tribunal stressed that the Covid-19 pandemic presented a unique challenge, the urgent manner in which the case was tried, and the clear objective to deter suppliers form exploiting consumers from excessive pricing during the pandemic, led in our view to a decision which appeared to be justified largely upon notional (but overly simplified) theories of market power as opposed to robust and objective empirical evidence and economic principles ordinarily associated with excessive pricing cases. We did, however, in the Article acknowledge that:

We do not express views on the evidence underpinning the two cases. Further, had the Tribunal conducted a more robust economic analysis akin to traditional excessive pricing complaint, and fully assessed each of the factors that it ought to take into account, the Tribunal may have arrived at the same outcome.”

However, “by constantly referring to the Covid-19 pandemic, the Tribunal significantly lowered the threshold for establishing ‘dominance’; adopted a very limited ‘complaint period’; did not define a relevant market and rejected a comparison between prices of the respondent firm and other competitors during the same period. Further, this assessment was conducted on an urgent basis with limited economic evidence.”

Some of the more pertinent issues which emerged from the two cases are set out below:

  1. Although the cases were referred after the Minister had published anti-price gouging regulations (which essentially prohibits non-cost associated price increases for essential goods), the price increases relevant to the complaint occurred prior to the Regulations being enacted and hence the Regulations were not of application (this was acknowledged by the Tribunal).
  2. In the case of Babelegi, it was common cause that Babelegi’s market share pre-Covid 19 was less than 5% (yes 5%).
  3. The cases were heard on an urgent basis. Excessive pricing complaints are inherently complex and require robust and credible economic evidence. The respondents had a few weeks at most to prepare this economic evidence – despite the fact that the alleged excessive prices were no longer in effect.
  4. The complaint period was only one month (which hardly seems appropriate to assess and allow ordinary market dynamics – even in the most competitive market environments – to correct a market failure).
  5. The “excessive prices” were not considered with reference to other competitors’ prices. Rather, it was limited largely to an assessment turning on whether the price increase was “reasonable” during the crisis in circumstances were there were no associated underlying cost increase.
  6. Market power, and hence dominance, was inferred merely by virtue of the fact that the respondents were able to charge an excessive price (which is circular and, at least in the case of Babelegi, only very few units were sold at the excessive price which points away from an exertion of market power over any durable period).

While Dis-Chem initially elected to appeal the Tribunal’s decision, this was subsequently abandoned. Babelegi, however, went on appeal and, in November 2020, the Competition Appeal Court (“CAC”) handed down its decision and upheld the Tribunal’s finding in Babelegi. The CAC did, however, waiver the administrative penalty.

For the most part, the CAC’s approach to the case does not differ materially from that of the Tribunal’s.

Perhaps the most striking paragraphs of the CAC’s decision are, however, found towards the end of the judgment which makes one question how the CAC arrived at its conclusion in the first instance. After the CAC had already concluded that Babelegi was “dominant” during the complaint period and charged excessive prices, the CAC held that it was regrettable that this case:

  1. was decided in the absence of price gouging legislation which should have been applicable during the complaint period.
  2. was brought with haste and imprecision; and
  3. involved a small firm (which is the type of firm which the Competition Act is so very much geared to protect and promote).

It seems that the CAC found itself in an invidious position. On the one hand, it recognized that charging prices substantially higher than the pre-pandemic level at the expense of consumers need to be guarded against. It did not, however, have the legislative arsenal (such as dedicated anti-price gouging legislation) to neatly deal with this harm. It also begs the question of whether anti-price gouging legislation in South Africa is in fact necessary in light of the CAC’s decision. Presumably any firm who during a national disaster increases its prices above that which is directly proportional to costs will be guilty of excessive pricing. Dedicated anti-price gouging legislation would, although very much welcomed, be superfluous.

In light of the precedential value of this decision, it becomes important to assess whether this decision ought only serve as guidance during a time of crisis. In this regard the CAC did state that during a time of crisis, one needs to adopt a different conceptual framework from that which would ordinarily be employed in excessive pricing cases. This is an important caveat to the CAC’s decision and might limit the precedential value of the decision itself. Although the

Unfortunately, it is less clear, on what basis the CAC departed from the traditional approach to determining excessive pricing cases. Although we all recognize the unique challenges caused by Covid-19, this itself does not seem a legitimate basis to deviate from the objectivity and certainty with which the Competition Act ought to be interpreted and applied.

It is not necessary to canvass in full the Competition Appeal Court’s decision and those who wish to consider this further are invited to read the judgment.

What is noteworthy, however, is that it was common cause that hardly any products were sold by the respondent at the grossly inflated prices and that the prices ultimately dropped to a level marginally above the pre-Covid-19 price (absent any intervention).

It is, therefore, unclear on what basis the Competition Appeal Court elected to limit the complaint period to one month. The concern being that markets which function entirely normally, may nevertheless experience demand shocks (a supplier may go bankrupt reducing capacity in the market, there may be a drought, the exchange rate may fluctuate and so forth). Excessive pricing cases have never been assessed, nor should they be assessed, with reference only to the period during which prices were higher than the prevailing levels. This would defeat the quint-essential assessment of market power – namely whether the market is able to rectify itself so that prices are able to revert to a competitive level. If the market does, within a reasonably period of time, then there should be no cause for concern. While there is no universally accepted time period to consider in this regard, it is noteworthy that in most jurisdictions new entry into the market is considered within a 2-3 year period (to give some sense of the time it can take to restore market defects).

Accordingly, it seems open to a complainant to argue that increased prices during any demand shock are excessive and, provided the complaint period is limited in duration, so as to exclude a time period during which prices may return to competitive levels, such a complaint may succeed.

There is of course a further concern with the approach to this matter. That is, the determination of the competitive level. It cannot be, absent some form of collective dominance theory, that a single firm with less than 5% market share is responsible for setting the competitive level. So, if during the pandemic the competitive price increases across the entire market due to an overall increase in demand, then reference between the alleged excessive price must be considered in relation to the new competitive price.

While the CAC cited with approval the European case of ABG Oil Companies (19 April 1977) where the European Court raised the lucky “monopolist” and indicated that more than one supplier could be dominant vis-à-vis its customers during a crisis, it is not apparent that the analogy is correctly applied in the South African context. If there are ten firms in the market and each have 10% market share and each prices its products at 50% higher than the pre-pandemic price, can it credibly be argued (consistent with the current legislative framework) that each firm is individually a dominant player charging excessive prices? While notionally possible, it should remain only a notion. The reality is that in practice, every firm, even in a highly competitive market, has some degree of market power. The question is therefore over simplified to suggest that a firm is dominant because it has market power. A firm must have substantial market power over a sustained period to raise concerns from a competition perspective.

While the crisis may change the way markets function and operate and even the very definition of the market, it seems that should be as far as any reference to the crisis should go. For example, if a customer is only allowed by law to travel within a 5km radius due to travel restrictions, then it could well be that the geographic market is more narrowly defined. But once you have a defined market, then it seems that the crisis plays a more limited role vis-a-vis assessing a respondent’s market power within that market. If, even on a more limited market definition, a respondent is unable to sustainably implement an excessive price or its prices are not less favorable than other competitors within the same and adjacent markets, it is difficult to conclude emphatically that the respondent is nonetheless dominant and guilty of excessive pricing.

The CAC’s decision provides little guidance on how more traditional cases of excessive prices will be adjudicated if the demand shock is not necessarily a result of a global health crisis but some other more mundane but economically equally applicable in relation to causing a significant and sudden demand shock.

As much as the adjudicative bodies have highlighted that context matters, once one deviates so significantly from legal and economic principles and rationale, the risk of uncertain and subjective decision making increases.

The approach by the authorities and adjudicative bodies, while noble, seems very much a case of fitting a square peg in a round hole. It was unfortunately not the right respondent,, legislative framework or process to follow to provide the necessary clarity regarding the assessment of “dominance” or the interpretation of the new excessive pricing provisions.

While the CAC’s decision in Babelegi does not offend one’s sense of justice, until the CAC has an opportunity to consider another traditional excessive pricing case (whatever that might mean), the precedential value of the Babelegi decision is concerning. Not so much for other price gouging cases, but rather to the assessment of dominance more generally.

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Nigeria’s Foreign-to-Foreign Merger Control Regime

By Michael-James Currie and Camilla Johnson

Antitrust enforcement is on the rise across Africa. Many jurisdictions are developing competition authorities and endorsing legislation with the intention of controlling cartel conduct, abuse of dominance and anti-competitive mergers.

In February 2019, Nigeria developed their first competition law regime through the enactment of the Federal Competition and Consumer Protection Act (“FCCPA”), which largely mirrors the South African Competition Act. This legislation was welcomed by market players and consumers, as Nigeria, being the number one oil exporter in the continent, is a key regional player in West Africa.

Prior to the FCCPA, there was no dedicated merger control legislation regulating transactions between non-Nigerian entities that affected the control of a Nigerian business. Section 2(3)(d) of the FCCPA specifically extends the Act’s application to any conduct outside the country by any person through the acquisition of assets resulting in the change of control of a business, or part of a business or any asset of a business, in Nigeria. The Federal Competition and Consumer Protection Commission (“FCCPC”) went a step further in their merger control regime by issuing the Guidelines on the Simplified Process for Foreign-to-Foreign Mergers with a Nigerian Component (“the Guidelines”). They are the first of their kind in Africa.

The legal review of mergers is essential to ensuring competitive behaviour is not undermined, economic performance is promoted, and consumer welfare is protected. The Guidelines provide a succinct, informative glimpse into the requirements for a successful merger review by the FCCPC and are thus intended to incentivise foreign investment.

The FCCPC must be notified of a foreign merger if it meets one of the alternative thresholds provided in the Guidelines. If the parties have a combined turnover of at least NGN 1 billion (approximately USD 2.5 million), they meet the combined leg. The filing fee will be the higher of NGN 3 million or 0,1% of the combined turnover. If the target entity has turnover of at least NGN 500 million (approximately USD 1.2 million), they meet the target leg and the filing fee will be NGN 2 million. A foreign-to-foreign merger could trigger either leg of the threshold. While the Guidelines do not expressly prescribe a “local nexus” test, a transaction which has an impact on the Nigerian economy will trigger the nexus.

Through the review procedure, the FCCPC seeks to uncover whether the proposed merger will activate anti-competitive or competitive behaviour in the Nigerian market. This is executed by considering whether the merger will substantially lessen or prevent competition in the market, or whether the merger would offset the negative effect on competition by producing technological contributions to the economy. A merger will also be justified if it substantially benefits the public interest, for example if domestic entities are able to compete in the international market, or employment opportunities are elevated. These are the tests against which the FCCPC will assess the proposed merger.

In the interest of transactional efficiency, the Guidelines introduced an expedited process for foreign-to-foreign mergers. The FCCPC will conduct a simplified review procedure, which results in a decision being issued within 15 business days. This will circumvent the typically lengthy review period, but at an additional cost of NGN 5 million (approximately USD 12 000).

While the documentation required is generally less cumbersome than what woudl ordinarily be required, parties must provide sufficient information to the FCCPC so as to enable the authority to confidently conclude that the transaction is unlikely to raise any competition concerns.

Parties must submit a description of the merger in the form of a non-confidential summary that will be published by the Commission, an executive summary and an explanation why the merger qualifies for simplified treatment. Detailed information relating to the merging parties and nature of the parties’ business is required, as well as the nature and details of the merger. Here the parties must describe the economic rationale of the merger as it affects Nigerian markets and the value of the transaction. Information on the turnover in Nigeria in the last financial year must be submitted for each of the undertakings concerned. With regards to supporting documentation, copies of the most recent documents relevant to the merger and an indication of the online location where the most recent and relevant financial information is available, is required.

The FCCPC requires market definitions in the form of a product and a geographical study, as well as a description of the local market activities to be provided, in order to ascertain the scope of the market power resulting from the merger. This includes an estimate of the total size of the market and expected sales (in terms of value and volume), and the nature of existing horizontal and vertical relationships with the prospective mergers’ five largest competitors.

[Michael-James Currie is a director at Primerio, Africa’s first boutique law firm dedicated to competition law practice across the African continent. He can be contacted at m.currie@primerio.international]

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AAT, AAT exclusive, excessive pricing, South Africa, Uncategorized

South Africa’s Second Price Gouging Case: Dis-Chem Penalised For Excessive Pricing re Face Masks

By Michael-James Currie and John Oxenham

On 14 July 2020, the South African Competition Tribunal published its written reasons in relation to its decision to penalize Dis-Chem (a large pharmaceutical chain in South Africa) for contravening section 8(1)(a) of the Competition Act by charging excessive prices for a variety of surgical face-mask products.

The Tribunal’ latest price gouging decision follows closely on the heels of the Tribunal’s decision in Babelegi, which was the first decision price gouging decision in South Africa during the Covid-19 pandemic (in terms of which the Tribunal also imposed a penalty on Babelegi based on a finding that Babelegi charged excessive prices for face masks during the pandemic). Babelegi was a firm which -pre-Covid 19 had a market share of less than 5%.

Turning to the Dis-Chem case, the price increases at play for three different face-masks were 261%, 43% and 25% respectively, on 9 March 2020 as the Covid-19 pandemic gripped South Africa, but before the Minister of Trade and Industry published the commonly referred to ‘Price Gouging Regulations’ (Regulations). The Regulations, promulgated, on 19 March 2020, essentially place a reverse onus on dominant firms (in relation to a defined list of “essential goods”) to demonstrate why any price increases post the proclamation of the Regulations, which were not directly and proportionally linked to a corresponding cost increase, are not “excessive”.

Although the Competition Commission (SACC) had initially framed its case in terms of the Regulations, the Tribunal confirmed that the Regulations did not apply retroactively. Accordingly, the Tribunal proceeded to analysis the complaint in terms of section 8(1)(a) of the Act read together with the factors set out in section 8(3) of the Act in order to determine whether a price is excessive. This is noteworthy as the principles underpinning the Dis-Chem decision are applicable regardless of whether the Regulations are, or remain in, force and may well apply to cases beyond the Covid-19 pandemic.

In terms of the recently amended Competition Act, an “excessive price” is defined as a price which has “no reasonable relation to the economic value of the product”. If there is a prima facie case of excessive pricing, the onus shifts to the respondent to demonstrate that the price is not excessive.

The Tribunal held that in order to demonstrate an “excessive price”, what the complainant must show is a price which “on the face of it was utterly exorbitant”. The respondent would then need to show that the increase was reasonable.

The crux of the case, however, largely turns on whether Dis-Chem is in fact considered “dominant”. Dominance, generally, is determined with reference to whether a firm is able to exert a substantial degree of “market power”. In terms of South Africa’s Competition Act, a firm is irrebuttably presumed to be dominant if it has market shares in excess of 45%. A firm can still be found to be dominant, however, with market shares less than 45% if it can be established that the firm is able to exert “market power”. “Market power” is specifically defined in the Act as “the power of a firm to control prices or to exclude competition, or to behave to an appreciable extent independently of its competitors, customers or suppliers”.

The Commission argued that defining the relevant market was not necessary. Rather, the fact that Dis-Chem was able to materially increase its prices in the context of a global health crisis independently of its competitors, customers or suppliers, meant that Dis-Chem was able to exert “market power” and was therefore “dominant”.

The Tribunal confirmed that the assessment of “market power” may be conducted with reference to the prevailing market conditions without having to specifically define the market. In essence, the Tribunal asked itself what advantages the global-health crisis conferred to the respondent (in this case Dis-Chem) that it would not enjoy absent the crisis?

At the time of the relevant price increase, the public were encouraged to wear surgical face-masks. The Tribunal rejected, therefore the argument raised by Dis-Chem that cloth face-masks are a suitable substitute. Dis-Chem had argued that barriers to entry were low as face-masks where easy to produce from a supply-side. The product market was broadly defined as the market for surgical face masks.

Turning to the geographic market definition, the Tribunal suggested that the geographic market must be narrowed (based on customers reluctance to travel far during the pandemic) despite Dis-Chem applying a national pricing strategy. The Tribunal ultimately did not define the geographic market. Instead, its assessment essentially refers back to that relating to the tests for market power. In essence, the Tribunal held that because there were concerns among consumers about supply shortages, consumers would not be prepared to “shop around” for better options fearing they may miss out altogether. The Tribunal mentioned that applying the well known “hypothetical monopolist test”, that Dis-Chem would have been able to profitably raise its prices by more than 5% and, therefore, was essentially in its own market (the Tribunal did not define the precise geographic boundaries of the market even though these was evidence put up suggesting that there were many suppliers of surgical face masks within a very small geographic radius of Dis-Chem’s largest outlets). Accordingly, this case was not determined by narrowing the geographic market.

Turning to the economic tests utilized or considered by the Tribunal, the following is summarized:

  1. The relevant “benchmark” price used was the price immediately before the Covid-19 pandemic compared to the prices thereafter.
  2. The relevant complaint period was held to be 1-31 March 2020.
  3. That the empirical evidence assessed pointed to an increase in prices in March (compared to prices prevailing in January and February) without a direct link to cost increases. Consequently, the Tribunal found that the gross-margins increased “exponentially” during the complaint period.
  4. The Tribunal rejected the argument that for multi-product retailers, profit margins ought to be assessed with reference to “net” as opposed to “gross” margins. In other words, the Tribunal precluded any cross-subsidization type defences.

The Tribunal found that had it not been for the surge demand for surgical face-masks as a result of the health crisis posed by Covid-19, Dis-Chem would not have been able to increase the prices to the extent it did. Further, the Tribunal found Dis-Chem enjoyed and exerted market power by substantially increasing its prices and profit margins for face-masks and therefore the SACC had established a prima facie case of excessive pricing which shifted the burden of proof to Dis-Chem to show its price increases were “reasonable”.

In determining whether a price increase is “reasonable”, the Tribunal appears to disfavour any economic assessment to the inquiry. Instead the Tribunal suggests that any price increase (presumably irrespective of the percentage increment) in relation to an item essential for the public’s health is unreasonable. Following the Tribunal’s earlier finding that the price increases were substantial, the Tribunal held that Dis-Chem’s price increases during the pandemic were “utterly unreasonable and reprehensible”.

As an aside, the Tribunal suggests that the price increase of any good in South Africa between 47%-261% would affect the public interest adversely. In the context of a health crisis where those increases related to essential goods, the price increase has a particular impact on poor customers.

Accordingly, the Tribunal found that Dis-Chem had engaged in excessive pricing in contravention of the Act and imposed a penalty of R1.2 million (which was calculated based on approximately twice the turnover which Dis-Chem derived from face-masks during the complaint period).

The Tribunal’s decision in Dis-Chem provides more analysis and considerations to market definition than the case of Babelegi although the central features and findings in both cases are the same. Due to the Covid-19 pandemic, both Dis-Chem and Babelegi charged higher prices to consumer in relation to products considered essential to the health and well-being of the public and because these price increase were nor justified with reference to cost increases, the prices were considered “excessive”.

The Tribunal (as part of its assessment under the geographic market definition analysis) provides an important qualifier to intervening in matters arising from short-term market conditions. In particular, the Tribunal stated that “material price increases of life essential items such as surgical masks, even in the short run, in a health disaster such as the Covid-19 outbreak, warrants our intervention”. This is an important caveat as the Tribunal appears to recognize that intervening in competition law matters based on short term market conditions may have unintended consequences and that ordinarily competition authorities should allow the market to “self-regulate”.

While opportunistic and exploitative behaviour during a time of crisis may indeed warrant scrutiny, one does question whether these decisions fall into the classic “hard cases make bad law” dictum coined by US Supreme Court Justice, OW Holmes.

Different standards of law and economics should not apply to firms simply based on the type of product that they produce or sell. To punish a firm because it supplies essential healthcare products may indeed be a noble public interest objective, but caution must be had to using mechanisms such as the Competition Act to achieve these outcomes if the economic principles and justifications do not stack up.

While the Tribunal was at pains to point out in Dis-Chem that context matters, it is less clear precisely what context matters in excessive pricing cases going forward. Are the market dynamics due to the Covid-19 pandemic an outlier unlikely to repeat itself in history and that the Tribunal’s recent price gouging decisions should be assessed in that context? Or, does the Tribunal’s decision effectively mean that any firm who is able to profitably increase a price by 5% has market power (and is, therefore, dominant) and, therefore, any such price increase (unless linked proportionately to a cost increase) is prima facie excessive? When will the Tribunal intervene in excessive price cases and when will it allow the normal forces of supply and demand and the hallmark features of a dynamic competition to rectify any market abnormalities?

While the Tribunal suggests that a 47% increase and above would be excessive for “any good” in South Africa, the Tribunal does not provide much guidance on where to the draw the line. The Tribunal rejected the US’s guidance which refers to a 10% increase (in the context of a price increase of an essential good). Previously the Competition Appeal Court in the Sasol judgment suggested (without setting a firm benchmark) that a price which is less than 25% more than the economic value of the product cannot be said to be excessive.

While the Tribunal does make cursory mention of the prices of other competitors, the Tribunal seems to err in one important regard. Excessive price cases and indeed the assessment of market power should not be conducted with reference to the overall demand shock in the market but with reference to the firm’s ability to act independently of other competitors in the same prevailing market conditions. A comparison therefore between pre-market shock and post-market shock insofar as the shock applies to the whole market, is somewhat irrelevant.

If the overall demand for face-masks increased and all face-mask suppliers are able to profitably increase their prices for face-masks during the relevant period, it can hardly be said that every face-mask supplier is “dominant” during that period. If all ice-cream suppliers raise their prices in summer versus winter that would clearly not be a result of ice-cream suppliers having market power during the summer months only. The Tribunal’s analysis in Dis-Chem does not seem to answer this issue and in fact lends credence to such an outcome which would clearly not be supported by any credible economic justification.

The Tribunal does not deal with another important aspect relating to principles of supply and demand more generally. The Tribunal recognizes that there were (and are) a shortage of supply for face-masks. It was the shortage of supply (be it actual or potential) which in fact led to “panic buying” and higher demand and therefore higher prices. To suggest that the poorest customers are most likely to be harmed due to price increases following demand shocks is correct. However, all customers (including the poorest) are likely to be harmed if the supply shortage cannot be addressed and is perpetuated by the on-going health crisis. The most sensible way to encourage entry into the supply side market for face-masks is to allow such firms to earn short term profits which it would not otherwise enjoy. Without the upside incentive, new entry into the supply side market is unlikely and the only disciplining safeguard left in the market is quasi-price regulation by the competition authorities. The forces of competition in such instances are, therefore, precluded from being allowed to operate to restore the market to competitive levels. The Tribunal, however, recognizes in the Dis-Chem decision that in certain instances it should in fact play the role of a price regulator.

So where does that leave us? Firstly, it seems very likely that the Dis-Chem decision will be taken on appeal. Until such time as the Tribunal’s decision is altered (if at all), firms selling goods which are considered “essential” in the fight against Covid-19 should take particular cognizance of this decision. Secondly, the price gouging regulations published by the Minister are essentially rendered nugatory by the Tribunal’s approach to excessive pricing cases. Thirdly, regardless of the size of the firm pre-Covid, if a firm is able to increase its prices unilaterally as a result of a demand shock following the Covid health, there is a significant risk that the Tribunal will consider such a firm to possess market power and hence unless such price increase is justified with reference to cost increases, potentially liable to an administrative penalty (and possibly follow-on civil damages).

[About the Authors: John Oxenham and Michael-James Currie are practicing competition law attorneys based in South Africa and advise clients on competition law related matters across most African jurisdictions]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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AAT exclusive, Access to Information, dominance, exemptions, South Africa, Uncategorized

Enforcement Alert: SACC ordered to remedy its complaint referral in 2nd CompuTicket abuse-of-dominance case

By Charl van der Merwe, assisted by Christine Turkington & Gina Lodolo

The South African competition Commission (SACC) has suffered yet another procedural setback- related to the facts pleaded in its referral affidavit – this time, in its ongoing saga with Computicket and Shoprite Checkers, apropos Computicket’s alleged abuse of dominance.

In its initial case against Computicket, which ultimately went to the Competition Appeal Court, SACC succeeded in holding Computicket to account for abuse of dominance in contravention of section 8(d)(i) of the Competition Act (Computicket One). Computicket One was based on the fact that Computicket had entered into exclusive agreements with customers which had the effect of excluding competitors from the market. See exclusive AAT article on Computicket One case here.

The SACC was critical of the conduct of Shoprite Checkers as, in Computicket One, the SACC alleged that the exclusive agreements were entered into between Computicket and Shoprite Checkers shortly after the Computicket was acquired by Shoprite Checkers. Computicket One was based on the agreement entered into for the period 2005 to 2010.

Accordingly and shortly after the conclusion of Computicket One, the SACC referred a second complaint against Computicket for abuse of dominance. The cause of action is substantively similar as that which had been found to be a contravention in Computicket One, however, this time based on the agreements entered into from January 2013 and which are alleged to be ongoing (Computicket Two). In Computicket Two, however, the SACC now seeks to hold Shoprite Checkers jointly and severally liable with Computicket in its capacity as the ultimate parent company of Computicket. Moreover, the SACC appears to seek the imposition of a penalty based on the higher turnover of Shoprite Checkers.

Note that Computicket Two was referred to the Tribunal prior to the enactment of the Competition Amendment Act, which provides for parent companies to be held jointly and severally liable for the conduct of subsidiaries and/or allows for the calculation of an administrative penalty, based on the turnover of the parent company where the parent was aware or ought to have been aware of the conduct of the subsidiary.

The Tribunal, therefore, found the SACC’s referral affidavit to be flawed and lacking of the facts (and points of law) necessary to sustain a cause of action, particularly in so far as it seeks to hold Shoprite Checkers liable. In this regard, the Tribunal expressly held that they view Computicket and Shoprite Checkers as separate economic entities and should thus be treated separately with respect to the allegations made in the Commission’s complaint referral.

The Tribunal went on the emphasize that on the consideration of dominance (which is the statutory first step to an assessment under section 8), “… the Commission conceded that Shoprite Checkers is not active in the market for outsourced ticketing services to inventory providers in which Computicket is active. Unsurprisingly, no market shares attributable to Shoprite Checkers are reflected anywhere in the Commission’s referral. It is simply unclear of what we are to make of the allegations against Shoprite Checkers.”

In order to correct these defects and instead of dismissing SACC’s case, the Tribunal ordered the SACC to file a supplementary affidavit. The Tribunal held that “[g]iven that the Commission’s reliance on the single economic entity doctrine fails and the question of dominance is abundantly opaque, the Commission must rectify its referral to properly reflect and clarify the case against Shoprite Checkers in order for it to meet the case put against it.”

Should the SACC fail to file its supplementary affidavit, within the 30 business days, as order by the Tribunal, Shoprite Checkers and Computicket may approach the Tribunal for an order that the case be dismissed.

John Oxenham, director of Primerio, notes that the Tribunal’s order in allowing the SACC an opportunity to first supplement or amend its referral affidavit is in line with the recent orders of both the Tribunal and Competition Appeal Court to first allow such opportunity for the SACC to remedy its case, instead of ordering an outright dismissal of the case on an interlocutory basis. This is likely to form the precedent for interlocutory applications, even where the facts suggest that the SACC’s case is opportunistic and incapable of being remedied.

According to competition lawyer, Michael-James Currie, the recent orders which have come out of the Tribunal and Competition Appeal Court in interlocutory applications will hopefully have a positive effect on the manner in which cases are referred and prosecuted in South Africa.

The SACC has at times demonstrated a tendency to be overly broad in its complaint referrals, causing respondent firms to engage in costly and time consuming internal investigations to assess the merits of such cases. With the development of the previously underutilized interlocutory processes, respondent firms are now able to, at an early stage of the litigation process, ensure that the SACC sets out its case in a concise manner, substantiated with the requisite factual allegations required to sustain its case, thereby avoiding the unnecessary cost of expansive internal investigations and protracted litigation.

 

 

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AAT, AAT exclusive, excessive pricing, South Africa, Uncategorized

South Africa Competition Tribunal: Regulations published to expedite COVID-19 excessive and unfair pricing complaint referrals

[The editors at AfricanAntitrust wish to thank Jemma Muller and Gina Lodolo for compiling this article]

On 3 April 2020, Minister Ebrahim Patel made amendments to section 27(2) of the Competition Act 89 of 1998 (“the Act”) with regards to the regulations pertaining to the functions of the Competition Tribunal (“the Tribunal”).

The amendment was enacted to regulate complaint referrals for alleged contravention of section 8(1)(a) of the Act which deals with the charging of excessive prices by a dominant firm. The amendment is crucial in light of the current state of affairs, where the charging of excessive prices has become more frequent during the Covid-19 outbreak. Accordingly, the amendment is only applicable for the duration of the period of the declaration of a Natural State of Disaster with regards to COVID-19.

An applicant who wishes to bring a complaint based on an alleged contravention of section 8(1)(a) of the Act, read with the Consumer and Customer Protection Regulations, must file a Notice of Motion and founding affidavit to the Tribunal.

Urgent complaint referral procedure

Who must file the complaint referral?

A complaint referral may be filed by the Commission or a complainant, as soon as possible after the commission has issued a notice of non-referral to that complainant.

Notice of motion requirements

An applicant must allege a contravention of section 8(1)(a), indicate the order sought against the respondent(s) and state the name and and address (electronic or otherwise) of each respondent in respect to whom the order is sought. Applicant’s may also state the date and time on which the applicant wishes the matter to be heard by the Tribunal.

Founding affidavit

The founding affidavit must set out the grounds of urgency and the material points of law and evidence that support the complaint. In addition, the applicant may include confirmatory affidavits from any factual or expert witnesses.

Procedure

The applicant must serve a copy of the Notice of Motion and founding affidavit on each of the respondent(s) named in the Notice of Motion and file a copy of the application with the Tribunal.

The important time periods:

A respondent must serve a copy of their Answering Affidavit on the complainant within 72 hours of service of the complaint referral. Thereafter the person who filed the Complaint referral may serve a copy for their Reply within 24 hours after being served with a copy of the Answering Affidavit.

The Tribunal will then determine the date and time for the hearing of the complaint referral (Tribunal Rules 6,16,17,18,18,47,54 and 55 apply to an application under this Rule unless they pertain to Rules which stipulate time-frames).

These documents may be filed electronically.

Urgent hearing

The Tribunal may direct that the urgent complaint proceedings in terms of the Rules may be conducted wholly as video or audio proceedings.

If no answering affidavit is filed within the period set out in the Notice of Motion or such extended period as may be determined by the Tribunal, the urgent complaint referral may be heard on an unopposed basis.

The Tribunal will determine if there was contravention of section 8(1)(a) of the Act based on the evidence contained in the affidavits unless there is a substantial dispute of fact which cannot be resolved by affidavits. In this case the Tribunal may determine an expedited procedure (which may include oral evidence on an expedited basis by way of video or audio proceedings). The Tribunal may also call for further evidence if it is required (subject to section 55 of the Act).

Remedies

The Tribunal may impose a pricing order if the respondent has been found to contravene section 8(1)(a) of the Act. The respondent may apply to appeal or review the decision on an urgent basis to the Competition Appeal Court (the pricing order will remain in force unless it is set aside by the court on appeal or review).

Consent order

The Commission may at any time (before, during and after and investigation) conclude a consent agreement for a complaint under section 8(1)(a) of the Act and it will be the full and final settlement of the matter  (including settlement of civil proceedings). This consent order may be confirmed by the Tribunal without hearing any evidence.

The amended complaint referral procedures equip complainants with the means in which to assist the competition authorities in penalizing those who have used the prevailing circumstances to exploit consumers, and is thus a commendable and efficient tool invoked by the Minister.

 

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