Advertise Here
Icon

Directory

IconActuaries
IconAdministration Outsourcing
IconAsset Managers
IconAssociations & Institutes
IconAuditors
IconBanking
IconBBBEE Consulting and Verification Agencies
IconBusiness Chambers
IconBusiness Process Management
IconBusiness Process Outsourcing
IconCompliance
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconCurrencies
IconDebit Order Collection Facilities
IconEducation and Training
IconFAIS
IconHuman Resources
IconInformation Technology and Software Partners
IconInvestment Consulting
IconInvestment Fund Managers
IconLegal
IconLISPs
IconListed Equities
IconOmbud
IconParticipation Bond Managers
IconPolicy Administration
IconPolicy Trading
IconProperty Unit Trusts (PUTS)
IconPublications
IconRegulatory Authorities
IconStock Exchange
IconSurveys and Research
IconTraining Courses & Workshops
IconUnit Trust Fund Managers
IconWellness Programs
Advertise Here
  Subscribe To »

Competition Amendment Bill 2018 aims to protect market participation of non-dominant firms

Published

2018

Tue

14

Aug

 

By Rosalind Lake and Erwyn Durman
Norton Rose Fulbright South Africa Inc.

The overriding intention of the Competition Amendment Bill of 2018, introduced in parliament on 12 July 2018, is to address perceived high levels of concentration and the skewed ownership profile of the South African economy. The competition authorities have consistently expressed concerns about the large number of dominant firms operating in the economy which they view as contributing to the ‘concentration problem’. Being dominant (having market shares from 35% upwards or less than that but with market power) is not prohibited but there are special rules that restrict what dominant firms can do for markets to operate competitively.

Abuses of a dominant position are notoriously complex cases to prove and the Bill introduces extensive changes to the abuse of dominance provisions in the Competition Act. These changes are designed to make it easier for the competition authorities to prosecute abuses of a dominant position and also to protect small and medium businesses from exclusionary and exploitative practices by dominant firms.

Some of the proposed changes will have negative consequences and will make doing business more uncertain for dominant firms.

Currently, conduct by a dominant firm can be considered an exclusionary act if it impedes or prevents other firms from entering into or expanding within a market. The Bill expands the definition of exclusionary act to also mean impeding or preventing other firms from participating in a market. There are also new restrictions regarding the price at which dominant firms are supplied or at which they can supply. These provisions are aimed at protecting small and medium firms (still to be defined) and firms owned or controlled by historically disadvantaged individuals.

What does participating in a market  mean?

Participate, as defined in the Bill, means the ability of or opportunity for firms to sustain themselves in the market. The proposed introduction of the term ‘participation’ into South Africa’s competition law regime is rooted in the preamble to the Act, which provides for ‘for full and free participation in the economy’.

Participation by firms other than dominant firms will be relevant not only for determining whether a dominant firm has engaged in an exclusionary act, but also for an assessment of a dominant firm’s purchase prices from a small and medium business or a firm controlled or owned by a historically disadvantaged person. When it comes to price discrimination (on purchase or selling prices by a dominant firm), the onus will be on the dominant firm to show that its actions did not impede the ability of small and medium business or a firm controlled or owned by a historically disadvantaged person to participate effectively. It is not clear that this reverse onus is warranted in these circumstances nor is it apparent how a dominant firm will be able to prove that its actions did not have negative effects on participation of any firm.

What concerns arise for dominant firms?

The definition of ‘participate’ is broad and vague. It does not make any allowance for an assessment of whether the participating firm needs to be an efficient firm nor does it indicate how long a firm should be able to ‘sustain’ itself in the market. Therefore it is unclear whether these provisions will protect an inefficient small or medium sized firm regardless of the possible detriment to consumers.

Although the intention of these changes is to encourage transformation and market participation which is a welcome aim, these goals should be carefully balanced against the benefits of a competitive market for consumers.

It is unclear how a dominant firm would be able to determine whether its conduct impacts on another firm’s ability to sustain itself in the market and to what extent a dominant firm would be obliged to investigate the impact of its conduct on other firms and to prove that this is not the case.

Will the changes inadvertently limit competition?

What is particularly concerning is that these changes mean that a dominant firm is under an obligation to ensure that its conduct does not prevent its rivals from sustaining themselves in a market. At the very essence of a competitive market is rivalry among competitors rather than cooperation or supporting one’s competitors. It will be a difficult balance for dominant firms to ensure that they do not inhibit the ability of a firm (which may be an inefficient firm) to sustain itself in a market whilst simultaneously competing aggressively.

Have your say

The proposed changes will make it difficult for dominant firms to determine whether their conduct constitutes an exclusionary act or if their pricing is permissible.

There is still an opportunity to comment on the changes proposed in the Bill until 17 August 2018. The proposals will have a major impact on how dominant firms operate in South Africa.

Please reach out to anyone in the Norton Rose Fulbright competition team for assistance in understanding how these proposals will impact on your business operations. 

 
Source: Norton Rose Fulbright South Africa Inc.
 
« Back to previous page Print this page » |
 

Breaking News »

What is the difference between Black Friday and Cyber Monday?

Cyber Monday originated in the US and is a marketing term used for the Monday after Thanksgiving. It was created by retailers to encourage people to shop online. The term was coined by Ellen ...
Read More »

  

Interview with Bright Rock CEO, Schalk Malan about their ground-breaking temporary disability cover

In October 2019 Needs-matched life insurance provider, BrightRock, announced enhancements to their temporary expenses cover. Read More More recently Insurancegateway® Interviewed Schalk Malan to not only ...
Read More »

  

The Importance of an effective online campaign

As we enter the age of the fourth industrial revolution, a technological transformation driven by the internet, it seems almost unthinkable that the web would not be the preferred platform chosen by businesses ...
Read More »

  

Tomorrow’s retirement industry will be radically different – So what should pension funds be thinking about now?

By Petri Greeff, Head of Investment Advisory at RisCura Pension funds today should be investing for a horizon of 80 years or more. While it’s impossible to predict what the world will be like in 2100, ...
Read More »

 

More News »

Image

Healthcare »

Image

Life »

Image

Retirement »

Image

Short-term »

Advertise Here
Image
Image
Image
Advertise Here

From The Glossary »

Icon

Call option (American):

A deal giving the holder the right, without the obligation, to buy a particular underlying asset at the strike price any time before the expiration date.
More Definitions »

 

Advertise

 

eZine

 

Contact IG

 

Media Pack

 

RSS Feeds

By using this website you agree to the Terms of Use.
Copyright © Insurance Gateway (Pty) Ltd 2004 - 2019. All Rights Reserved.