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Certain Sections of Competition Amendment Act in Effect

February 14, 2020

The Presidency

Certain sections of the Competition Amendment Act have come into effect.

The presidency published Proclamation 10 in Government Gazette 43018.

President Ramaphosa assented to the act in February 2019.

The bill was passed by parliament and sent for assent in December 2018.

The bill, designed to address concentration and drive transformation in the local economy, was published for comment at the end of 2017 and tabled in July 2018.

During its deliberations, the portfolio committee on economic development introduced a number of amendments to the bill including a new definition on margin squeeze, that the minister must make regulations in terms of section 78, a new subsection 4 on abuse of dominance prohibited and a new clause 11 on conditional approvals.

The select committee on economic and business development adopted the bill without amendments.

The act aims to amend the Competition Act of 1998, so as to introduce provisions that:

• clarify and improve the determination of prohibited practices relating to restrictive horizontal and vertical practices, abuse of dominance and price discrimination and to strengthen the penalty regime;
• introduce greater flexibility in the granting of exemptions which promote transformation and growth;
• strengthen the role of market inquiries and merger processes in the promotion of competition and economic transformation through addressing the structures and de-concentration of markets;
• protect and stimulate the growth of small and medium businesses and firms owned and controlled by historically disadvantaged persons while at the same time protecting and promoting employment, employment security and worker ownership;
• facilitate the effective participation of the National Executive within proceedings contemplated in the Act, including making provision for National Executive intervention in respect of mergers that affect the national security interests of the Republic;
• mandate the Commission to act in accordance with the results of a market inquiry;
• amend the process by which market inquiries are initiated and promote greater efficiency regarding the conduct of market inquiries;
• clarify and foster greater certainty regarding the determination of confidential information and access to confidential information;
• provide the Competition Commission with the powers to conduct impact studies on prior decisions;
• promote the administrative efficiency of the Competition Commission and Competition Tribunal; and
• provide for matters connected therewith.

Sections that came into effect on the date of publication include Section 5, in so far as it relates to section 8(4) of the Competition Act, No. 89 of 1998; Section 6; Sections 27 to 28 and Section 33(a), in so far as it relates to Sections 8(4) and 9(1A) of the Competition Act 89 of 1998.

The sections focus on abuse of dominance, price discrimination by dominant firms and disclosure of information.

Meanwhile, the economic development department, in Gazette 43018, has published regulations on buyer power and price discrimination drawn up in terms of the act.

The Regulations on Buyer Power, in Notice 168, aim to designate the sectors of dominant firms which are prohibited from requiring or imposing unfair prices or other trading conditions on a supplier; set out the relevant factors and benchmarks for determining whether prices and other trading conditions imposed are unfair and in respect of firms owned or controlled by historically disadvantaged persons, set out the benchmarks for determining the firms to which section 8(4) applies.

They focus on factors of buyer power to be satisfied to establish a contravention, determination of unfair price, trading conditions and designated sectors.

Designated sectors include grocery wholesale and retail sector, agro-processing sector and ecommerce and online services sector.

The regulations “apply to firms controlled and owned by historically disadvantaged persons that supply 20 per cent or less of the purchases of the dominant buyer for the relevant goods or service”.

The Regulations on Price Discrimination, in Notice 169, aim to give effect to section 9(1)(a)(ii) of the act and to provide for the benchmarks for determining the application of section 9(1)(a)(ii) to firms owned and controlled by historically disadvantaged persons; and to set out the relevant factors and benchmarks for determining whether a dominant firm’s action is price discrimination that impedes the participation of small and medium businesses and firms controlled and owned by historically disadvantaged persons.

They focus on factors of price discrimination to satisfy to establish a contravention, price discrimination, application to firms controlled and owned by historically disadvantaged persons and guidelines.

The regulations also apply to firms controlled and owned by historically disadvantaged persons that purchase less than 20% of goods and services from dominant sellers.

Both sets of regulations came into effect on the date of publication.