Competition Commission South Africa Grants ZA Abuse of Dominance Exemption

• The Market Conduct Division investigates allegations of abuse of dominance, vertical restrictive practices, and horizontal restrictive practices.
• Abuse of dominance requires proof that a company has significant market power and is using it to harm competition.
• Companies can apply for exemptions under Section 10 of the Competition Act if their conduct promotes economic efficiency or protects consumers.
• Exemptions may be granted for agreements related to intellectual property rights and professional associations' rules.

The hurdles involved in proving abuse of dominance cases are significant and such cases require extensive legal and economic analysis.

The Market Conduct Division of the Competition Commission South Africa is responsible for investigating allegations of abuse of dominance, vertical restrictive practices, and horizontal restrictive practices. These investigations can be triggered by complaints from competitors, customers, or other stakeholders. The division's top team of analysts with expertise in economics and law evaluates evidence and determines whether a company has abused its dominant position. This process requires extensive legal and economic analysis, as evident in the small number of cases where abuse of dominance has been found. In these cases, courts have required significant evidence to support findings of abuse of dominance.

The Competition Act prohibits companies from abusing their dominant position but does not prohibit them from holding a dominant position. To prove abuse of dominance, the Commission must show that a company has significant market power, allowing it to behave in a manner that does not take into account its competitors' reactions or control prices. This can include exclusive supply agreements and minimum resale price prescriptions. Restrictive vertical practices refer to acts between companies in a vertical relationship that substantially prevent or lessen competition in a specific market. Examples of restrictive vertical practices include exclusive supply agreements and minimum resale price prescriptions.

Section 10 of the Competition Act allows companies to apply for exemptions if their conduct contributes to objectives such as promoting economic efficiency or protecting consumers. This means that companies can engage in practices that might otherwise be prohibited under Chapter 2 of the Act, but can demonstrate a net benefit to competition. Exemptions may also be granted for agreements related to intellectual property rights and professional associations' rules. However, these exemptions are subject to strict requirements and must be carefully reviewed by lawyers.

Lawyers should be aware that companies may apply for exemptions under Section 10 of the Competition Act if their conduct contributes to objectives such as promoting economic efficiency or protecting consumers, and must carefully review the requirements for exemption applications.

Source: Original reporting via Market Conduct