By Michael-James Currie, Gina Lodolo and Nicola Taljaard
As aptly put by Campton P[1] “it is probably safe to say that in the developed world, competition is now accepted as the best available mechanism for maximizing the things that one can demand from an economic system in most circumstances. Economic regulation is increasingly perceived to be at the opposite end of the spectrum – it tends to leave a larger number of people with a reduced real income and a lower standard of living.”
Introduction
Regulatory intervention in the competition law arena, which is aimed at ensuring markets function optimally and are competitive, is the essence of most traditional competition law regimes. There is, however, an increasing risk of over regulation and over enforcement which may undermine incentives to invest and innovate, ultimately leading to a dampening effect on pro-competitive conduct.
Competition enforcement should principally be aimed at ensuring features of the market do not distort competition on the merits. It should not be used as a tool for price regulation. In this paper, we explore some of the recent abuse of dominance cases in South Africa – most notably the “price gouging” cases – adjudicated during the height of the Covid-19 pandemic and flag several risks that may materialize if those cases are to be used as blueprints for future enforcement activity.
In this paper we explore the benchmarks set out in what was the leading jurisprudence on excessive pricing in South Africa, namely the Sasol Chemical Industries Limited v Competition Commission[2] before the Competition Tribunal (“Tribunal”) and Competition Appeal Court (“CAC”)[3] respectively and how the excessive price test and standards against which excessive pricing cases have recently been adjudicated, has developed – both in terms of the amendments to the legislation as well as recent cases assessed under the “price gouging” rubric. This is particularly topical as we expect to see an increase in the number of excessive pricing cases brought in South Africa.
In the CAC decision of Babelegi,[4] however, Judge Dennis Davis himself noted the challenging nature of the excessive pricing doctrine for competition authorities, as it “requires them, to a considerable extent, to act in the manner of a price regulator”.[5] He further notes in relation to these challenges, that the decision by the CAC in Babelegi was even more complicated in light of the fact that it had to be “determined through the prism of an excessive pricing provision” which was not specifically designed for the complex and novel conditions brought about by the pandemic.[6]
Against this backdrop, we discuss the Sasol case as well as unpack the price gouging cases and highlight several concerns associated with an overly interventionist approach in prosecuting perceived excessive pricing cases.
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