South Africa has a developed and regulated competition regime based on best international practice.
South Africa’s economic system is predominantly based on free market principles. However, as in most developed economies, competition is controlled.
The Competition Act of 1998 fundamentally reformed the country’s competition legislation, substantially strengthening the powers of the competition authorities along the lines of the European Union, US and Canadian models.
The Act provides for various prohibitions on anti-competitive conduct, restrictive practices (such as price fixing, predatory pricing and collusive tendering) and “abuses” by “dominant” firms (firms with a market share of 35% or more).
The Act also entails a notification and prior approval procedure for certain mergers and acquisitions, carries significant penalties for contraventions – and reaches beyond South Africa, applying to economic activity both in and having an effect in the country.
The Competition Amendment Act of 2009 introduces measures such as criminal sanctions against directors and managers who participate in cartel conduct, or tacitly consent to such conduct; a market inquiry provision to inquire into the state of competition in a particular market; and leniency provisions which protect whistleblower firms or individuals.
In general, the Competition Act seeks to maintain and promote competition in the South African market to:
- Promote economic efficiency, adaptability and development.
- Provide consumers with competitive prices and product choices.
- Promote employment and general socio-economic welfare.
- Promote a greater spread of ownership within the economy, in particular by increasing the ownership of historically disadvantaged individuals.
- Ensure that small business have an equitable opportunity to participate in the economy.
- Expand opportunities for South African participation in world markets, while recognising the role of foreign competition within South Africa.
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The Competition Commission is responsible for investigating and evaluating mergers and prohibited practices. It has the power to disallow small and intermediate mergers, and makes recommendations on larger mergers to the Competition Tribunal.
The commission is independent but its decisions may be appealed to the Competition Tribunal and the Competition Appeal Court.
The Department of Economic Development guides the work of the Competition Commission and the Competition Tribunal.
In terms of the law, the competition authorities can take into account both competitiveness and general public interest – including black economic empowerment – in arriving at their judgments.
Reviewed: 26 March 2013
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