a) In the case of Harmony Gold Mining Company Ltd v Mittal Steel South Africa Ltd, Mittal’s practice of employing import parity pricing in the South African flat steel market was found to have constituted an abuse of dominance and attracted an administrative penalty of ZAR 691.8 million.
b) In 2007, a bread cartel was uncovered which engaged in price fixing of bread and milling costs. Tiger Brands was fined ZAR 99 million (approx. USD 6,603,015), while Pioneer Foods was fined ZAR 195.7 million (approx. USD 13,052,627,362).
c) In 2013, the Commission reached settlements with 15 construction firms involved in collusive tendering under a “Construction Fast Track Settlement Process”, which incentivised firms to come forward and make full disclosure of collusive tendering in return for lower penalties. The amount agreed with the 15 firms in the construction cartel totalled ZAR 1.46 billion (approx. USD 97,377,802).
d) In February 2019, the Commission and the South African Broadcasting Corporation (“SABC”) entered into a settlement agreement, in terms of which, SABC admitted to price fixing and the fixing of trading conditions, in contravention of the Competition Act. SABC undertook to pay an administrative penalty of ZAR 31,845,795.33 (approx. USD 2,124,022) and further remedies, including:
- 25% bonus advertising space for Qualifying Small Agencies for a three-year period, capped at ZAR 40,000,000 (approx. USD 2,667,885) annually; and
- ZAR 17,797,645.97 (approx. USD 1,187,051) contribution to the Economic Development Fund.
e) In July 2019, South Africa’s largest manufacturer and distributor of number plate blanks and embossing machines was ordered to pay an administrative penalty of ZAR 16,192,315 (approx. USD 1,079,980). The manufacturer had been using long-term exclusive agreements to contractually oblige its customers to also purchase all of their number plate blanks and embossing materials from it whenever they purchase an embossing machine. The agreements prevented the customers from switching to alternative suppliers of number plate blanks, and hindered the ability of rivals to access customers for number plate blanks in the market.
f) In July 2020, Dis-Chem Pharmacy was ordered to pay an administrative penalty of ZAR 1,200,000 (approx. USD 80,036) for abusing its dominance and excessively pricing on facemasks during the COVID-19 pandemic. Although the penalty is not significant, the case is notable due to the authorities’ reliance on temporary dominance in the context of the COVID-19 pandemic as a basis for finding Dis-Chem guilty of excessive pricing.
Yes. Please refer to the response below.
Exclusivity clauses and restraints amongst parties in a vertical relationship are analysed by “rule of reason” and may be problematic if they result in a substantial prevention or lessening of competition in a market that cannot be outweighed by technological, efficiency or pro-competitive gains.
Restraints and exclusivities of long duration (i.e., generally in excess of three to five years) are likely to be more problematic than restraints / exclusivities with a shorter duration and more limited scope. Each case must be assessed on its own merits. In addition, exclusivity arrangements and restraints involving dominant entities are more likely to be problematic.
A number of matters dealing with exclusivity clauses have been prosecuted by the Commission, including:
a) In June 2019, the Commission published a decision by the Tribunal, involving a ZAR 16 million (approx. USD 1,067,154) fine against Uniplate Group (Pty) Ltd (“Uniplate”), South Africa’s largest manufacturer and distributor of number plate blanks and embossing machines. Uniplate had concluded agreements with its customers who buy embossing machines, whereby it would be the exclusive supplier for all their blank plates and embossing materials, for a period of 10 years. Embossing machines and number plate blanks are used together to produce the final number plate which is affixed to vehicles. The Tribunal found the agreements to constitute a breach of competition law as they hinder the ability of Uniplate’s rivals to procure customers for number plates and further tied customers to one supplier, depriving them an opportunity to seek lower prices for blank plates and plate materials.
b) In October 2019, the CAC dismissed an appeal by Computicket (Pty) Ltd (“Computicket”), where Computicket sought to challenge the Tribunal’s finding that it had abused its dominance by concluding exclusive agreements with inventory providers. The exclusive agreements were imposed by Computicket, and limited the ability of inventory providers to sell through different ticket distribution services for the entertainment industry, which covers events such as sports, cinemas, theatres, festivals and live events.
c) Following the release of the Grocery Retail Market Inquiry in November 2019, which found that exclusive long-term lease agreements between property developers and supermarket chains which prevented the landlord from leasing premises in the same shopping centre to potential competing grocery and other retailers led to an unjustifiable foreclosure of competing retailers, particularly small and independent retailers as well as emerging challenger retailers. This, in turn, led to remedial action, and consent agreements were subsequently agreed with Shoprite and Pick ‘n Pay, to allow SMMEs and specialty and limited line retail stores (i.e., stores that sell specific product categories such as butcheries, bakeries and liquor stores, for example) to lease premises within the same shopping centre. Furthermore, both retailers agreed that no new leases including exclusivity provisions would be concluded.
Non-compete clauses can fall in two broad categories, namely:
a) Naked non-compete restraints: These are restraints of trade that are cartelistic in nature - i.e., aimed at market division, customer / territory / supplier / goods or service allocation. Such restraints are automatically prohibited and no justifications are permitted in defence of these clauses.
b) Garden variety restraints: These clauses resemble a stock-standard (“garden variety”) restraint of trade that applies in the context of post-employment restraints (i.e., provisions in an employment contract obliging the employee to refrain from competing with the employer after termination of the employment relationship); sale of business restraints (i.e., provision in a sale of business agreement obliging the seller not to compete with the business sold); and post-partnership restraints (i.e., provision in a partnership agreement obliging a retiring partner to refrain from competing with the remaining partners after leaving the partnership business). Such clauses are not automatically prohibited but they should be limited in terms of duration and scope. It is sensible to analyse these clauses on a case-by-case basis.
Yes. On 8 October 2021, the Commission received a formal complaint from the Council for Medical Schemes against the laboratories alleging that the prices for supplying PCR tests for COVID-19 was unfairly inflated, exorbitant and/or unjustifiable. In the main, it was alleged that private pathology laboratories obtained substantial cost reductions in conducting COVID-19 PCR tests and were processing significant volumes (especially during infection waves), yet the price charged by the private pathology laboratories for COVID-19 PCR tests remained persistently high and unchanged at ZAR 850.
In December 2021, the Competition Commission announced that it had reached a settlement agreement with three major laboratories, Ampath, Lancet Laboratories and Pathcare, on a substantial reduction of COVID-19 PCR test prices, from about ZAR 850 to no more than ZAR 500 (VAT inclusive) per test.
Yes. Please refer to the response Question 1 above, for a details in respect of the abuse of buyer power provisions. There have not been any cases brought against entities accused of abusing their buyer power thus far.
Yes. Cartel conduct or anticompetitive conduct is an offence punishable by imprisonment, fine or both under the Competition Act. In terms of the Competition Act, directors, managers, or employees purporting to have management authority, who are responsible for, or knowingly acquiesce, in cartel conduct, may be fined up to ZAR 500,000 (approx. USD 33,348) and/or may be subjected to imprisonment for a period of up to 10 years. To date, no criminal charges have been pursued, or criminal sanctions imposed, in such cases.