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Comment Sought on Draft Enforcement Guidelines

October 21, 2019

Department of Economic Development

21 October 2019

Draft Enforcement Guidelines on buyer power and price discrimination have been published for comment.

The economic development department published the call for comment in Government Gazette 42775.

The Draft Enforcement Guidelines flow from the Competition Amendment Act assented to by President Ramaphosa in February 2019.

Most sections of the act came into effect in July 2019.

However, Sections 8(4) and 9(1)(a)(ii) containing new abuse of dominance provisions did not come into force as regulations still needed to be promulgated.

Earlier this month, the department published Draft Price Discrimination Regulations and Draft Buyer Power Regulations for comment.

The Draft Price Discrimination Regulations seek 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.

They also aim 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 or owned by historically disadvantaged persons”.

Detail is provided on elements of price discrimination to be satisfied to establish a contravention, price discrimination, application to firms controlled or owned by historically disadvantaged persons and guidelines.

As regards the Draft Buyer Power Regulations, they are designed to designate the sectors of dominant firms which are prohibited to require from or impose on a supplier unfair prices or other trading conditions; 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.

Issues covered include elements of a contravention, determination of unfair price, determination of unfair trading conditions, designated sectors, application to firms controlled or owned by historically disadvantaged persons and guidelines.

The Draft Enforcement Guidelines outline the “general principles that the Commission will follow in assessing whether alleged conduct contravenes section 8(4) and section 9(1)(a)(ii) of the Act. These provide guidance through outlining how the Commission intends to interpret the new buyer power and price discrimination provisions for enforcement purposes, and further how it will seek to screen and assess complaints laid in terms of the new provision”.

Comment on the Draft Guidelines is invited within 28 days of the date of publication of the notice.

Meanwhile, in Notice 554, the department listed approved mergers by the Competition Tribunal.

Mergers include the acquiring of the Passanger Vehicle Dealership Business by RO Metrics Trading (Pty) Ltd; LCI (Overseas) Investment (Pty) Ltd by Peermont Holdings (Pty) Ltd; the licensed brands and related assets currently held by Diageo SA (Pty) Ltd by the South African Breweries (Pty) Ltd; MediaMark (Pty) Ltd by Kagiso Media Investments (Pty) Ltd and Clover Industries Ltd by Milco SA (Pty) Ltd.