Chapter 1 Summary- Introduction to Competition Law
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Course
Competition Law (LAWS4078A)
Institution
University Of The Witwatersrand (wits)
This is a summary of chapter 1 from the Practical Guide to the South African Competition Act (2nd ed) and serves as an introduction to competition law, its sources and authorities
COMPETITION LAW TEXTBOOK SUMMARY
Chapter 1: SA Competition Law and policy
Competition policy
is a regulatory tool that addresses market failures by maintaining and
creating foundations for effective functioning markets
aim is to create free market conditions and creating regulatory
institutions and procedures that will make sures there’s equal
opportunities for all business and that customers are protected
this policy includes economic policy that aims to enhance competition in
local and international markets & competition/ anti-trust laws
Competition law
refers to provisions and rules that aim to ensure and sustain a market
where it’s vigorous but fair resulting in the most efficient allocation of
economic resources
is designed to create a level playing field where big and small business
can compete fairly and effectively
Sources of competition law
in 1979, competition in SA was regulated by the Maintenance and
Promotion of Competition Act 96 of 1979, which allowed for
adjudication of competition matters by the Competition Board
appointed by the Minister of Trade and Industry and investigations were
done at the Ministers own initiative. This Act had no compulsory
enforcement action or merger control provisions, however practices like
collusion, resale price maintenance, and bid rigging was outright illegal
as per the Act
after 1994, it was decided that the 1979 Act was not effective, and the
domestic economy needed to be regulated better, therefore the
Competition Act 89 of 1998 was implemented
The Competition Act: Aims and Provisions
in summary, the competition act aims to achieve lower prices and
greater choices for consumers
the South African legislation differs because it refers to wide-public
interest goals such as employment and the addition of a public interest
mandate
, the act regulates conduct such as
o horizontal practices= interaction between competitors
o vertical practices= interaction between suppliers and customers
o dominant firms= interaction between firms with market power
o pricing behavior
o mergers and acquisitions
Prohibited practices in the Act
Horizontal restrictive practices
this is an absolute prohibition (per se) and refers to price
fixing, dividing markets and collusive tendering.
Is an agreement between competitors which prevents or
lessens competition in a market.
Vertical restrictive practices
This is an absolute prohibition (per se) and refers to resale price
maintenance
Is an agreement between parties in a vertical relationship which
prevents, or lessens competition in a market.
Abuse of dominance
This is an absolute prohibition (per se) and refers to charging an
excessive price, refusing access to an essential facility
Also makes reference to exclusionary behavior, inducing a
supplier/ customer not to deal with a competitor, refusal to
supply, predatory pricing, and price discrimination
Merger control
This prohibition applies to an intermediate merger where the
combined gross turnover of an acquiring and target firm into or
from South Africa is more than R650 million and the value of
target firm’s gross turnover into or from South Africa is more than
R80 millions
this prohibition applies to a large merger where the combined
gross turnover all of the acquiring and target firm into or from
South Africa is more than R6,6 billion and the value of the target
firms grass turnover into or from South Africa is more than R190
million
a merger can be defined as when one or more firms directly or
indirectly acquire/ establish direct or indirect control over the
whole part or part of the business of another firm
a merger assessment is used to determine the strength of
competition in the relevant market, public interest, presence of
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