The Competition Act 89 of 1998
Introduction
The Competition Act 89 of 1998 is the primary legislation governing competition law in South Africa. The Act prohibits restrictive practices, abuse of dominance, and regulates mergers. It establishes three specialised institutions: the Competition Commission, the Competition Tribunal, and the Competition Appeal Court. The Act aims to promote and maintain competition while addressing historical economic concentration.
Objectives
Section 2 of the Act sets out its purposes. These include: promoting efficiency, adaptability, and development of the economy; providing consumers with competitive prices and product choices; promoting employment and social welfare; expanding opportunities for South African participation in world markets; ensuring that small and medium-sized enterprises have equitable participation; and promoting a greater spread of ownership (particularly for historically disadvantaged persons).
Restrictive Practices
Part 1 of Chapter 2 regulates horizontal restrictive practices. Section 4 prohibits price fixing, market division, and collusive tendering per se. Section 5 regulates vertical restrictive practices, prohibiting minimum resale price maintenance per se and other vertical restraints on a rule of reason basis.
Abuse of Dominance
Part 2 of Chapter 2 prohibits abuse of dominance. A firm is dominant if it has at least 45% market share. Section 8 prohibits excessive pricing, refusal to supply essential facilities, and exclusionary acts. Section 9 prohibits price discrimination by dominant firms.
Merger Control
Chapter 3 regulates mergers. Mergers are classified as small, intermediate, or large. The Commission investigates mergers; the Tribunal adjudicates. The assessment considers competition effects and public interest factors, including employment and the participation of historically disadvantaged persons.
Enforcement
The Act provides for administrative penalties of up to 10% of annual turnover (first offence) or 25% (repeat offence). Private enforcement through civil damages claims is available following a finding of prohibited practice. The Act has criminal sanctions for cartel conduct.
Conclusion
The Competition Act 1998 is a modern, effective competition law regime. Its institutional framework, its prohibition of restrictive practices and abuse of dominance, and its merger control provisions align with international best practice. The inclusion of public interest considerations reflects South Africa’s unique historical context and constitutional commitments.