OVERVIEW / INTRO
Competition law is premised on the acceptance of the underlying economic
theory that, in free market economies, competition between firms yields
efficiencies & improves consumer welfare. However, markets fail when pure
self-interest prevails to the extent that economic power is subverted to the
advantage of the few and at the expense of the many. A classic example is
Microsoft v Commission of the European Communities (2007), where
Microsoft abused its dominant position in the PC operating system market by
refusing to provide interoperability information to competitors and by bunding
its Windows Media Player with its Windows operating system, thereby
preventing potential competitors from entering the market. Therefore,
although the market is the optimum mechanism for allocating & distributing
resources, competition laws are necessary to prevent monopolies from
distorting supply & demand and ensure that no single firm can set prices
independently of the market.
The need for legal intervention arises when markets fail (due to monopolies,
externalities or under-supply of essentials), or social objectives (such as
equality or affordability) outweigh pure efficiency. Competition policy refers
to the manner in which governments & competition authorities adopt measures
to promote & protect competition. Competition law is an expression of
competition policy choices – it is the legislature’s efforts best to effect
competition policy by prohibiting certain conduct that is deemed to be harmful
to competition, and equipping competition authorities with the necessary
jurisdiction & powers to enforce competition policy through the law.
The Competition Act 89 of 1998 (‘the Act’) prohibited various practices,
such as restrictive horizontal practices (s 4), restrictive vertical practices (s 5),
and abuses of a dominant position (ss 6-9). Ito the Act, these prohibited
practices were to be investigated by the newly established Competition
Commission (s 19), an independent & impartial (s 20(1)) body which has the
responsibility to, inter alia, investigate & evaluate alleged prohibited practices
(s 21) and refer matters to & appear before the Competition Tribunal (s 36), a
tribunal of record with jurisdiction throughout the RSA. It is submitted that the
nature of the legislation is distinctly socio-economic. As such, the remedies at
the disposal of the competition authorities should be viewed in the same light,
and accordingly be seen to be used to provide equitable relief rather than to
punish transgressors of the Act.
1
, INTERPRETING THE ACT
In the new democratic era, the concentration of ownership of private wealth
represented of the dispossession, inequality and ‘unfairness’ that characterised
apartheid. Competition law emerged in SA in response to this. Section 2 (the
purposes clause) read together with the Preamble makes it apparent that the
Act had a democratic objective. This is further reinforced by section 12A,
which requires the competition authorities to consider certain public interest
concerns in reviewing a proposed merger. It is submitted that the nature of
the legislation is distinctly socio-economic. As such, the remedies at the
disposal of the competition authorities should be viewed in the same light, and
accordingly be seen to be used to provide equitable relief rather than to punish
transgressors of the Act.
Preamble – The enactment of the Competition Act was premised on the goal
of curbing excessive economic power concentrated in the hands of the minority
white population.
Section 2 (purposes clause) – The Act is not only concerned with judicial
competition matters but also concerned about questions of dealing with small
firms subjected to economic powers of large firms.
Section 1(2) – Dictates that the Act must be interpreted in a manner that is
consistent with the Constitution and gives effect to the purposes set out in
section 2, and in compliance with the international law obligations of the
Republic.
Minister of Economic Development v Walmart 2012 (CAC)
» This case highlighted the South African competition authorities’ focus on
public interest issues – particularly employment & the empowerment of local
businesses – in merger reviews. The conditions set by the CAC were
designed to protect jobs & stimulate local economic transformation in line
with the objectives of the Act.
Competition Commission v Mediclinic 2022 (CC)
» In accordance with section 1(2) of the Act, this case emphasised that
competition law must be interpreted & applied with regard to the
Constitution and in a manner that gives effect to the purposes of the Act.
» This case involved a proposed merger in the healthcare sector, with the
central question being whether it would increase healthcare prices. The
2
Competition law is premised on the acceptance of the underlying economic
theory that, in free market economies, competition between firms yields
efficiencies & improves consumer welfare. However, markets fail when pure
self-interest prevails to the extent that economic power is subverted to the
advantage of the few and at the expense of the many. A classic example is
Microsoft v Commission of the European Communities (2007), where
Microsoft abused its dominant position in the PC operating system market by
refusing to provide interoperability information to competitors and by bunding
its Windows Media Player with its Windows operating system, thereby
preventing potential competitors from entering the market. Therefore,
although the market is the optimum mechanism for allocating & distributing
resources, competition laws are necessary to prevent monopolies from
distorting supply & demand and ensure that no single firm can set prices
independently of the market.
The need for legal intervention arises when markets fail (due to monopolies,
externalities or under-supply of essentials), or social objectives (such as
equality or affordability) outweigh pure efficiency. Competition policy refers
to the manner in which governments & competition authorities adopt measures
to promote & protect competition. Competition law is an expression of
competition policy choices – it is the legislature’s efforts best to effect
competition policy by prohibiting certain conduct that is deemed to be harmful
to competition, and equipping competition authorities with the necessary
jurisdiction & powers to enforce competition policy through the law.
The Competition Act 89 of 1998 (‘the Act’) prohibited various practices,
such as restrictive horizontal practices (s 4), restrictive vertical practices (s 5),
and abuses of a dominant position (ss 6-9). Ito the Act, these prohibited
practices were to be investigated by the newly established Competition
Commission (s 19), an independent & impartial (s 20(1)) body which has the
responsibility to, inter alia, investigate & evaluate alleged prohibited practices
(s 21) and refer matters to & appear before the Competition Tribunal (s 36), a
tribunal of record with jurisdiction throughout the RSA. It is submitted that the
nature of the legislation is distinctly socio-economic. As such, the remedies at
the disposal of the competition authorities should be viewed in the same light,
and accordingly be seen to be used to provide equitable relief rather than to
punish transgressors of the Act.
1
, INTERPRETING THE ACT
In the new democratic era, the concentration of ownership of private wealth
represented of the dispossession, inequality and ‘unfairness’ that characterised
apartheid. Competition law emerged in SA in response to this. Section 2 (the
purposes clause) read together with the Preamble makes it apparent that the
Act had a democratic objective. This is further reinforced by section 12A,
which requires the competition authorities to consider certain public interest
concerns in reviewing a proposed merger. It is submitted that the nature of
the legislation is distinctly socio-economic. As such, the remedies at the
disposal of the competition authorities should be viewed in the same light, and
accordingly be seen to be used to provide equitable relief rather than to punish
transgressors of the Act.
Preamble – The enactment of the Competition Act was premised on the goal
of curbing excessive economic power concentrated in the hands of the minority
white population.
Section 2 (purposes clause) – The Act is not only concerned with judicial
competition matters but also concerned about questions of dealing with small
firms subjected to economic powers of large firms.
Section 1(2) – Dictates that the Act must be interpreted in a manner that is
consistent with the Constitution and gives effect to the purposes set out in
section 2, and in compliance with the international law obligations of the
Republic.
Minister of Economic Development v Walmart 2012 (CAC)
» This case highlighted the South African competition authorities’ focus on
public interest issues – particularly employment & the empowerment of local
businesses – in merger reviews. The conditions set by the CAC were
designed to protect jobs & stimulate local economic transformation in line
with the objectives of the Act.
Competition Commission v Mediclinic 2022 (CC)
» In accordance with section 1(2) of the Act, this case emphasised that
competition law must be interpreted & applied with regard to the
Constitution and in a manner that gives effect to the purposes of the Act.
» This case involved a proposed merger in the healthcare sector, with the
central question being whether it would increase healthcare prices. The
2
