South African Constitutional Court rules on appropriate test for class action relief for damages

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ZA Constitutional Court broadens ambit of class-action relief

As previously reported, the Supreme Court of Appeal (the “SCA”) handed down two judgments, in November 2012, in respect of the certification of a class in respect of a number of class actions against three bread producers arising from an investigation by the Competition Commission into price fixing and market allocation in respect of various bread products. The appeals were brought by a bread distributor in the Western Cape (the “distributor” application) and by a number of organisations in relation to a so-called “consumer” class action for damages after their applications were dismissed by the Western Cape High Court (the “WCHC”).

The distributors and consumers sought, separately and on appeal to the SCA, to certify three classes, one in respect of the distributors and two in relation to the consumer case. The consumers sought a certification of two classes: Class 1 – all persons who purchased the bread of the three Respondents in the Western Cape Province during the period 18 December 2006 to 6 January 2009; and Class 2 – all persons who purchased the bread of the three Respondents in Gauteng, Free State, North – West or Mpumalanga Province during the period 1 September 2999 to 6 January 2009. The respondents in the appeal were three bread producers, namely Pioneer Foods, Tiger Consumer Brands Limited and Premier Foods Limited.

The SCA upheld the appeal only in relation to the certification of consumer Class 1, and dismissed the consumer Class 2 certification application as well as the certification of the distributor’s class. In a landmark decision, the SCA held that class actions should be recognised, not only in respect of constitutional claims, but also in any other case where access to justice in terms of Section 34 of the Constitution recognized that it would be the most appropriate means of litigating the claims of the members of the class. The decision, per Wallis JA, laid down criteria for class action claims (these included certification, a class definition, a cause of action, a triable issue, common issues of fact or law and a representative who did not have a conflict). Furthermore, in highlighting the importance of the certification process, it set out further requirements that should be met in order to succeed with an application for certification of a class.

The distributors subsequently sought leave to appeal the decision of the SCA. Today, on 27 June 2013, the Constitutional Court handed down a judgment upholding the appeal against the SCA’s distributor decision. The majority judgment, written by Jafta J, stated that the standard for determining whether to permit the certification of a class is to determine whether the institution of the class action, while taking account the requirements laid down by Wallis JA, is in the “interests of justice.”  Accordingly, the requirements for seeking class action relief have been diluted somewhat and greater discretion is given to the court which will consider the certification application, as “[a]ccess to courts is fundamentally important to our democratic order.”

The Court admonished trial courts not to limit certification only to those cases in which strictly all factors enunciated in the Bread decisions were present:

“These requirements must serve as factors to be taken into account in determining where the interests of justice lie in a particular case.  They must not be treated as conditions precedent or jurisdictional facts which must be present before an application for certification may succeed. The absence of one or another requirement must not oblige a court to refuse certification where the interests of justice demand otherwise.”

In a separate concurring judgment, Froneman J noted that the development of the common law to make provisions for class actions in non-constitutional matters was a valuable contribution to the law and provided courts with flexible guidelines to apply in applications for the certification of class actions. Froneman J was, however, of the opinion that the test applied by the SCA was too stringent in not recognising opt-in class relief and secondly in finding that the distributor did not have a legally tenable claim due to the pass-on problem in competition matters.

The Constitutional Court, in the distributor case, has also broadened the ambit of class action relief in recognising opt-in class actions (rather than simply the opt-out class actions accepted by the SCA) and by lowering the threshold required for certification more generally.  On the pass-on front, it also viewed the existence of cognisable damages suffered by intermediate bread distributors – and not only end-user consumers – as “potentially plausible” (echoing somewhat the U.S. Supreme Court in Twombly).

All of the above will have ramifications for future competition-law damages actions.

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Soccer fields, SRAM, and Sotheby’s? Fast-track settlements in ZA construction probe yield €113m

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What do soccer stadiums, LCD panels, and lysine** have in common?  Price-fixing might be one answer.  Record antitrust fines might be another, closely related, response.

The South African Competition Commission (“Commission”) has obtained settlements of 1.5 billion rand or about €113 million with up to 15 construction companies.  This constitutes, by our reckoning, a new record for the Commission.

The fast-track settlement procedure used by the agency (in all but 3 cases, in which the accused firms chose not to pursue fast-tracking) shortened the time necessary to reach finality on the deals.  It also allows the Commission to free up its manpower resources to work on other matters, since maintaining full-fledged investigations in all of the now-settled cases would have been a long and arduous process for all parties involved — as we reported previously on AfricanAntitrust.com here and here, the scope of the ZA construction-sector bid-rigging investigation has ballooned beyond even the wildest dreams of enforcers.

The Commission’s press release sheds further light on the breakdown of the fines per party, covering conduct since September 2006 in over 300 instances of bid-rigging:

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Post-scriptum: The fines, although record-setting, are lower than expected by investors.  Consequently, shares in the affected undertakings have soared 1-3%, as reported by BusinessReport here.

** Sorry – I strayed a bit from the original alliterative title here.  (Otherwise, I could not have made the “record fines” point…)

South Africa: MultiChoice may face competition authorities for abuse of dominance

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On Digital Media (“ODM”), owner of TopTV, has filed a complaint with the South African Competition Commission (“Commission”) against the Naspers controlled company, MultiChoice (which owns DStv as well as SuperSport) alleging abuse of dominance.

ODM alleges that SuperSport unfairly refused to share rights to all Premier Soccer League (“PSL”) matches from 2011 until 2016 with ODM. ODM submits that there is “not another sports broadcaster in the world today that enjoys a similar level of dominance to that of SuperSport” and has accused MultiChoice of contravening the Competition Act 89 of 1998 (“Act”) by refusing to give it access to, what ODM believes, is an “essential facility”, when it is feasible to do so.

The ODM complaint was lodged with the Commission several months ago following a statement made in parliament by Communications Minister Dina Pule, that the Minister would issue a policy directive to the Independent Communications Authority of South Africa to address competition in the broadcasting sector.

Commission spokesman, Keitumetse Letebele, said that the complaint is still being processed by the Commission’s screening unit who will write a recommendation to the Commissioner to either drop the case or pursue further investigation.

Antitrust in Mozambique? …could have stayed in COMESA.

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We know it’s a somewhat brusque title for a “new competition regime” post.
But we must ask ourselves: Why is the República de Moçambique now joining the growing cadre of countries with a competition-law regime** — almost exactly half a year after COMESA instituted its own competition rules?

That’s a rhetorical question, of course.  Mozambique notably decided to leave the (then-21 member state) COMESA organisation in 1997, after barely 3 years of membership.

The new Mozambique Competition Law, no. 10 / 2013 will become effective by 11 July 2013, with implementing rules to be finalised in the fall, which will guide the newly-established Autoridade Reguladora da Concorrência (Competition Regulatory Authority).  It is the result of a 6-year long process of designing and establishing a competition policy that began in 2007 with a domestic legislative push in this direction and a subsequent May 2008 draft competition law proposed by an E.U. study sponsored by the European Development Fund.  It remains to be seen whether the ARC will formally join the Lusophone Competition Network of Portuguese-speaking antitrust jurisdictions or not.

While the final version of the imminent Mozambiquan competition law includes a (suspensory!) merger notification regime, it is likely that deal enforcement will initially take a back seat to monopolisation/abuse-of-dominance issues, as the competitive landscape in the Mozambiquan economy is characterised less by mergers-to-monopoly rather than by formerly state-owned enterprises, now privatised, that tend to exert potential market dominance.

Details, details…

Depending on the severity of any infringement, a 1 to 5% prior-year turnover fine, as well as the potential for a criminal antitrust offence anticipatorily included in the law, all serve to cause market participants to tread more cautiously in the future.

(Oh, lest we forget to mention it, especially in the context of the fining scale:  the national flag of Mozambique sports a Kalashnikov AK-47 assault rifle, with bayonet attached.  We do not think that this is indicative of the country’s future antitrust enforcement style, but we do believe that Mozambique may be the only competition-law jurisdiction with a fully-automatic gun as a state symbol.)

The law goes into effect the second week of July 2013 (see our Countdown Timer at the bottom right of this page), for those who keep track…

Mobile communications as likely target?

We here at AfricanAntitrust.com predict that the comparatively large (and seemingly concentrated) mobile-phone market in Mozambique may soon see an investigation into abuses of dominance under the new law.  There are several million mobile subscribers vs. less than 100,000 landlines country-wide — yet, only 2 mobile providers exist, mCel & Vodacom.

** as to the “growing cadre”, how many jurisdictions are there nowadays?  The International Competition Network has about 111 member jurisdictions, which is indicative of the lower bound, but there are surely additional ones (e.g., COMESA, which is not a member of the ICN), so the total figure should be >112…

Class Actions in South Africa?

Nortons Inc., together with the South African Chamber of Commerce and Industry (SACCI) and the Mandela Institute at Wits School of Law, have gathered together a panel of experts to discuss the judgment in Pioneer Foods last year and the effects it has on South Africa’s jurisprudence & business community.

The seminar is entitled: “A new class – the problems and promises of class action litigation in South African law” and runs from 8:00 am – 4:30 pm on Wednesday, 12 June 2013, in Johannesburg at the Wits School of Law (map).

For more information, a full schedule, and to RSVP & sign up,

please visit the event page here.

Background:

On 29 November 2012, Judge Wallis of the Supreme Court of Appeal (the “SCA”) handed down judgment in The Trustees of The Children’s Resource Centre / Pioneer Foods (Pty) Limited & Others. The case related to the certification of a class in respect of a number of class actions against three bread producers arising from an investigation by the Competition Commission into price fixing and market allocation in respect of various bread products (the “Bread class action litigation”).

The appeals were brought by a bread distributor in the Western Cape and by a number of organisations in relation to a so-called “consumer” class action for damages after their applications were dismissed by the Western Cape High Court (the “WCHC”).

In its decision the SCA held that class actions should be recognised, not only in respect of constitutional claims, but also in any other case where access to justice in terms of Section 34 of the Constitution required that it would be the most appropriate means of litigating the claims of the members of the class. The SCA then laid down the requirements for such an action, commencing with the need for certification by the court at the outset, before even the issuing of summons. For this purpose, the SCA set out the following criteria before a court could certify a class action:

  • there must be an objectively identifiable class;
  • a cause of action must exist which raises a triable issue;
  • there must be common issues of law and fact that can appropriately be dealt with in the interests of all members of the class;
  • there must be appropriate procedures for distributing damages to the members of the class; and
  • the representatives must be suitable to conduct the litigation on behalf of the class.

The SCA found that the appellants’ case had changed during the course of the litigation; and it held that their definition of the proposed class was over-broad and the relief they sought inappropriate. However, Wallis JA held that their claim was potentially plausible and, as this was the first time that the SCA had laid down the requirements for bringing a class action, it was appropriate to afford the appellants an opportunity to remedy the flaws in their papers in compliance with these new requirements. Accordingly, the SCA remitted the matter back to the WCHC.

COMESA Commission responds to our article on Kenya’s competition authority taking jurisdiction away from CCC

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AfricanAntitrust.com‘s prior reporting here (and also here, as well as the corresponding Nortons brief) on the jurisdictional dispute between the Competition Authority of Kenya (“CAK”) and COMESA has garnered the attention of the multi-national organisation’s Competition Commission (“CCC”).

After reporting on Kenyan Attorney General Githu Muigai’s actions, seemingly wresting jurisdictional power over the review of certain transactions that clearly affect the Kenyan geographic market, we reported briefly and neutrally on this interesting development, concluding as follows:

This power purports to shield, at least temporarily, local firms from the COMESA competition laws. Under the multi-state competition regime, firms engaging in certain mergers and acquisitions with an effect in two or more member states are required to seek clearance from COMESA’s Competition Commission, a process that comes with significant costs and time delays not expected to the same extent with the CAK procedure.

The CCC asked, in its letter, to set the record straight and “to put the situation in its right context.”  We are happy to oblige and publish below COMESA’s official position on the jurisdictional dispute with Kenya.

As to the cost point, the CCC had this to say in its letter (full reprint below):

Consequently you may also need to know that from our preliminary assessment the Commission’s fees are much lower than that of the national competition authorities and this has resulted in the cost of doing business (notifying using the COMESA route) being reduced by about 43.4%.

This is an interesting “preliminary assessment” and must be based on theoretical calculations of notification fees, as there had not been any substantial number of notifications made as of 22 March.  The first publicly known notification was that of Philips/Funai, made around the same time in March.  Indeed, the CCC itself writes in its letter to us that the Commission has not yet concluded any merger investigation for one to have a basis for any comparisons yet.”  Fair point.

All of this begs the quite pragmatic question, of course, which is: how are merging/acquiring parties dealing with the existence of the COMESA notification regime?

In our “Is COMESA being ignored” post, we postulated the hypothetical question whether publicly known deals that clearly meet the COMESA thresholds but are not apparently notified should be taken as an indication of the CCC being turned a cold shoulder by certain sophisticated parties.

Why would they?  Perhaps the filing fees are, after all, not that insignificant or even lower than filing domestically with African NCAs?  Or the uncertainty of a rather untested, as of yet, CCC staff team has the parties worried about (1) the length/duration, or (2) outcome of the CCC procedure?  We don’t know, but we look forward to further analysis, insight, and news in coming months.

Here is the original language of the letter (signed “COMESA Competition Commission”), dated 22. March 2013:

The COMESA Competition Commission (the Commission) wishes to respond to the above article as follows:

1.         The above article raises serious concerns especially coming from a Member State of the COMESA Treaty whose competition authority was one of the architects of the COMESA Competition Regulations (the Regulations).  The article and its undertones challenges the very existence of the Regulations and the institution mandated with their enforcement.

2.        With the adoption of the COMESA Competition Regulations and Rules, there are now two separate legal regimes which govern the enforcement of competition law and policy in the COMESA Member States, namely;

a)      The National Competition laws: these are the national legal orders comprising the respective bodies of legal rules within each of the COMESA Member States.

b)      The Regional Legal Framework: these comprise the body of legal rules created at COMESA level such as the COMESA Competition Regulations and Rules.

3.         Given the two legal orders, the national order shall apply to the enforcement of anti-competitive practices emanating at national level hence, enforced by the national competition authorities in the respective Member States. Whereas the regional framework shall be invoked generally where there is a cross border impact.

4.         In the first place, as far as we are concerned, there has never been a jurisdictional battle between the COMESA Competition Commission (the Commission) and any national competition authority on the control of mergers at national level.  The scope of application of the Regulations as provided for under Article 3 and more specifically on mergers under Article 23(3) is very clear that its limited to transactions with a regional dimension and not local transactions as stated in the Article.  The relevant Articles are quoted below for clarity:

“Article 3

Scope of Application

“These Regulations apply to all economic activities whether conducted by private or public persons within, or having an effect within, the Common Market, except for those activities as set forth under Article 4. These Regulations apply to conduct covered by Parts 3, 4 and 5 which have an appreciable effect on trade between Member States and which restrict competition in the Common Market.””[emphasis added]

Article 23

Merger Control

…………………………………………………

3.  This Article shall apply where:

a) both the acquiring firm and target firm or either the acquiring firm or target firm operate in two or more Member States; and

b) the threshold of combined annual turnover or assets provided for in paragraph 3 is exceeded”.

5.         It is important to note that the Regulations were initiated by the COMESA Member States who had competition authorities in the 1980s and 1990s namely Kenya, Zambia and Zimbabwe, when they realized that with globalization, markets continued to extend beyond national boundaries and the national laws and their enforcement institutions were no longer sufficient to deal with the new market problems of the region.  To address these problems of enforcing multi-jurisdictional competition cases, a regional approach to the competition cases with regional coverage was found to be the solution.  They were also of the view that cooperation and transparency in procedures was essential for business as they would not be subjected to excessive costs arising from multiple, parallel and poorly coordinated investigations.  In fact Mr Justus Kijirah the then Commissioner for the then Monopolies and Pricing Commission of Kenya (the predecessor of the Competition Authority of Kenya) was part of the team of Consultants who were involved in the formulation and drafting of the Regulations and the Rules in April 2002.

6.         The draft Regulations and Rules prepared by the consultants went through a rigorous legislative review which included their discussion by the Trade and Legal Experts from COMESA Member States in October 2002 in Mangochi (Malawi), and by the COMESA Trade and Customs Committee in October 2002 and February 2003 in Lusaka (Zambia).  The COMESA Legal Committee also discussed the draft texts in February 2003, again in Lusaka (Zambia), and the COMESA Ministers of Justice and Attorneys-General approved the drafts during the same month.  The COMESA Competition Regulations were adopted by the COMESA Council of Ministers in December 2004 and they became effective upon their publication in the COMESA Official Gazette Vol. 9 No.2 as Decision No. 43 in Notice No 2 of 2004.

7.         Please note that of importance is Article 10(2) of the Treaty which categorically states that: “A regulation shall be binding on all the Member States in its entirety.”  This means that Kenya as a COMESA Member State is bound by the Regulations and is obliged by Article 5(2)(b) “…..take steps to secure the enactment of and the continuation of such legislation to give effect to this Treaty and in particular to confer upon the Regulations of the Council the force of law and the necessary legal effect within its territory”.

8.         We appreciate that under the Vienna Convention on the Law of Treaties 1969, the consent of a state to be bound by a treaty and therefore for the treaty to apply to the state at an international plane may be expressed by way of signature, exchange of instruments constituting a treaty, ratification, acceptance, approval or accession.  The Convention does not address the question of how States may then bring about the domestic implementation of the treaties which they have made applicable to them internationally.  The Convention leaves this question to be settled by each State, in accordance with its legal system.  Thus, “domestication” of treaties is a matter of national law and is not governed by international law.  A different process altogether is necessary in order for a treaty to be applicable at a domestic level.  Unless a treaty accepted by any Member State is incorporated into the domestic laws of that state, the rights and obligations contained in such a treaty are inapplicable and unenforceable domestically in the state concerned.  Most Member States constitution are the ones that state the position of the relationship between the treaty law and domestic law in the state’s legal system.

9.         Two major approaches, and some variations of them, may be identified with respect to the question of the status of treaties in domestic legal systems.  Some States follow the dualist approach to this question, while others follow the monist approach.

10.       Under the dualist approach, treaties are part of a separate legal system from that of the domestic law: They do not form part of domestic law directly. Thus, under this approach, a treaty to which a State has expressed its consent to be bound does not become automatically applicable within that State until an appropriate national legislation has been enacted to give the treaty the force of law domestically.  This is the so-called “act of transformation”, which has several ways for bringing about.  One of them is the direct incorporation of the treaty rules through a drafting technique which gives the force of law to specified provisions of the treaty or indeed the whole treaty, usually scheduled to the transforming act itself.  This is the approach which was inherited by Kenya and other commonwealth countries from the British practice, as the prime example.[1]

11.       Under the monist approach, traditionally a legal system of a State is considered to include treaties to which that State has given its consent to be bound. Thus, certain treaties may become directly applicable in that State domestically (self executing) and do not rely on subsequent national legislation to give them the force of law once they have been ratified by the State. “Where a treaty is thus considered to be “directly applicable”, under this approach, it means that the domestic courts as well as other governmental bodies would look to the treaty language itself as a source of law.”[2]

12.       Kenya now has a new constitution that was promulgated on 27 August 2010 replacing the 1969 Constitution.  The 2010 revised Constitution of Kenya introduced a monist approach with respect to the question of the status of treaties in domestic legal system.  Section 2 of the Constitution which deals with the issue of supremacy of the Constitution provides that:

Supremacy of this Constitution

(1) This Constitution is the supreme law of the Republic and binds all persons and all State organs at both levels of government.

(2) No person may claim or exercise State authority except as authorised under this Constitution.

(3) The validity or legality of this Constitution is not subject to challenge by or before any court or other State organ.

(4) Any law, including customary law, that is inconsistent with this Constitution is void to the extent of the inconsistency, and any act or omission in contravention of this Constitution is invalid.

(5) The general rules of international law shall form part of the law of Kenya.

(6) Any treaty or convention ratified by Kenya shall form part of the law of Kenya under this Constitution.

13.       In essence, section 2(6) of the Constitution of Kenya means that the COMESA Treaty and the Regulations made under it form part of the law of Kenya and are directly applicable domestically.  Since the Regulations form part of the laws of Kenya which the Competition Authority of Kenya should uphold there is therefore no basis for any jurisdictional battle.  In fact, the Competition Authority of Kenya has all along been acting in compliance with the Regulations when it accepted the appointment of its then Acting and now Director General Mr Wang’ombe Kariuki as a Board Member for the COMESA Competition Commission established under the Regulations.  Mr Kariuki took part in the setting up of the COMESA Competition Commission Secretariat.  He also participated in the drafting and recommending for approval to the COMESA Council of Ministers, which met in Kampala, Uganda in November 2012, the COMESA Rules on Merger Notification Thresholds and on Revenue Sharing of Merger Filing Fees whose underpinnings was the transfer of jurisdiction of mergers with a regional dimension from the national competition authorities to the COMESA Competition Commission.  For him to now make the Competition Authority of Kenya wrestle the COMESA Competition Commission for the right to control mergers and acquisitions within the COMESA region boggles the mind to say the least.

14.       As far as the statement to the effect that “Kenyan Attorney-General Githu Muigai has given the CAK the authority to act as the sole agency with the mandate to administer and clear local mergers and acquisitions” is concerned, it is our considered view that CAK has failed to comprehend the advice by the Attorney-General which according to the article above specifically states that CAK shall continue to exercise its jurisdiction on local mergers and acquisitions.  It is our understanding from the above article that the Honourable Attorney-General has not referred to merger transactions with regional dimension.  This is the correct position.  It is also our view that the Attorney-General is not the right office to interpret the provisions of the Treaty but the COMESA Court of Justice.  We are however, always happy to be persuaded by such advice.

15.       It is in fact the COMESA Court of Justice, regardless of whether a Member State has ratified the Treaty or not, that has the mandate to ensure the adherence to law in the interpretation and application of the Treaty (Article 19(1)) and by inference the Regulations made under the Treaty.  If Kenya as a COMESA Member State has issues pertaining to the application of the Regulations on its nationals which implies a challenge to the legality of the Regulations, we recommend that the best course of action would be for Kenya to refer the matter for determination by the COMESA Court of Justice in terms of Article 24(2) of the COMESA Treaty.

16.       It is also premature to conclude that the Regulations’ requirement for firms engaging in certain mergers and acquisitions with an effect in two or more member states should seek clearance from Commission came with significant costs and time delays not expected to the same extent with the Competition Authority of Kenya.  With all due respect, the Commission has not yet concluded any merger investigation for one to have a basis for any comparisons yet.  There is therefore no empirical evidence to support such a bold and far reaching statement.

17.       You may further wish to know that the current schedule of merger notification fees was debated on and approved for presentation to Council by the COMESA Competition Commission’s Board of Commissioners which comprise of heads of competition authorities in Member States.  Consequently you may also need to know that from our preliminary assessment the Commission’s fees are much lower than that of the national competition authorities and this has resulted in the cost of doing business (notifying using the COMESA route) being reduced by about 43.4%.

From the foregoing, we implore your good offices to put the situation in its right context.

COMESA Competition Commission

22/03/2013


[1] Dr.A.O.Adede,Chairman, Constitution of Kenya Review Commission, “Domestication Of International Obligations”, An Abstract, 15-09-2001.

[2] Ibid.

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ArcelorMittal, Telkom, now Sasol? “Excessive pricing” case going to trial in South Africa

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Settling the South African Competition Commission’s case against alleged collusion in the polypropylene market [for no less than R111 million] back in 2010 was not to be the end of Sasol‘s long antitrust journey in the polymers world.

The S.A. Competition Tribunal is hearing the excessive-pricing portion (which was not settled) of the Commission‘s claims against the refining & steel giant this month.  The relevant legal underpinning of the case is the provision against excessive pricing by a dominant firm.  Precedent has declared prices excessive that “bear no reasonable relation to the economic value of the good or service” at issue.  Pheeew.  Facts.  Economics.  Nice.  Looks like a coming battle of the experts to me…

By comparison, in the U.S., antitrust law of course does not forbid “excessive pricing.”  While setting and reaping apparently high prices may be indicative of monopoly power, such acts are not in themselves anti-competitive or illegal in the States.  In Verizon v. Trinko, the U.S. Supreme Court held famously that:

The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system. The opportunity to charge monopoly prices—at least for a short period—is what attracts “business acumen” in the first place; it induces risk taking that produces innovation and economic growth.

Interestingly, there is a notable history of failures in the area of ‘excessive pricing’ complaints in South Africa, as well, despite the statutory legitimisation of the cause of action.  In the prior ArcelorMittal and Telkom cases, the Commission and/or Tribunal lost in the end, either at trial or on appeal to the Competition Appeal Court.  That Court had found, in the ArcelorMittal case, that the antitrust watchdogs could not use the ‘excessive pricing’ provision of the statute to combat perceived anti-competitiveness in the “market structure rather than price level.”

We will, of course, report on the ongoing trial and ultimate outcome of this high-profile case, as it unfolds.

S.A. dominance in the Nigerian mobile telecom market? MTN concerned.

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AllAfrica.com reports that South African telecom giant MTN is in discussions with Nigeria’s Communications Commission (“NCC”) (again, note that Nigeria doesn’t have a competition law regime) relating to its 44% market share in mobile telephony in the country.

The NCC published its report in PDF format on its web site. The report, entitled “Determination of Dominance in Selected Communications Markets in Nigeria“, states in relevant part:

Nigeria is the fastest growing telecommunications market in Africa, rising from a meagre 500,000 telephone subscribers in 2001 to over 108 million as at December 2012 …

As the news report states, MTN is not accused of any abuse of its market power — that is, the hallmark of a unilateral / dominance case, abuse of dominance, is apparently yet absent from the NCC’s phantom case against the provider. What the NCC is worried about inter alia, however, is the preferential treatment given to MTN’s own customers and calls amongst that group. That’s interesting, because many providers across the world have similar “in-network” call rates (indeed, often even free allowances for in-network calls) without triggering antitrust review. The NCC does not perceive dominance issues in fixed voice or mobile data market segments. Rather than relying on the investigated operators’ submissions (proposing, among other things, to use a simple Herfindahl-Hirschman Index determination to see if the market segments were ‘concerntrated’), the NCC’s report lays out quite nicely how it used a “Structure‐Conduct‐Performance (SCP) model”.

The SCP model postulates that the structure of a market determines to large extent the conduct of the participants in the market, which in turn, influences the performance of the firms within the market with respect to profitability and efficiency.

We’ll see where this one goes. Perhaps it simply serves to reinforce our prior question: Is it not time for Nigeria to have its own, proper competition-law regime?

South Africa targets private healthcare sector in CC’s ‘market investigation’

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As reported today by Reuters and SA MoneyWeb, the South African government has announced that the South African Competition Commission will launch an investigation into the private healthcare sector. This is part of a larger initiative to conduct so-called “market inquiries,” on which we previously reported here and here, and which are a direct consequence of the March 2013 effective date of the South African Competition Amendment Act of 2009.

The Economic Development Minister Ebrahim Patel said that “[v]arious stakeholders have raised concerns about pricing, costs and the state of competition and innovation in private healthcare.”

Likely affected companies are all major players in the healthcare industry, including providers such as Life Healthcare, Mediclinic International and Netcare Ltd.

Parties turn a cold shoulder: Is COMESA’s CCC being ignored … ?

COMESA old flag colorZambia

A pressing question on many COMESA observers’ minds is this: do corporations (and their legal advisers) consciously ignore the CCC‘s jurisdiction and essentially flaunt the supra-national organisation’s merger-notification regime?

As reported by us yesterday, there may be an interesting test case coming up in the Uganda telecommunications sector, which may help clarify whether parties to known merger deals are simply ignoring the notification mandate of COMESA.

Today, we noticed what appears to have been two recent deals in the poultry sector in Zambia (yet another COMESA member state).  As the Zambian newspaper The Times reports, there were two transactions** that have been approved by the Zambian Competition and Consumer Protection Commission (CCPC) Board of Commissioners — seemingly unilaterally and without involvement of COMESA’s CCC.

Again, as with the potential Ugandan test case we discussed, the question now becomes: were the conditions to notifiability at the COMESA level met (likely yes), and if so, did the parties intentionally fail to notify the deal to the CCC … ?  To date, only one deal (Philips/Funai) is known to have been notified to the CCC, as AfricanAntitrust.com reported here.  We would love to hear from a representative of the CCC itself to get their view on the current state of affairs.

One possible explanation of the apparent lack of COMESA notification is that the transactions pre-dated the January 2013 effective date of the COMESA competition regime, but that seems unlikely at this late stage, given that it’s already May and the CCPC is only now giving its green light to the deals.

 

** The names of some of the parties are entertaining, no less, as they are Zamchick and Rainbow Chicken.  Presumably, the merged entity might adopt Rainbow Zamchick?