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Competition

One of the most basic economic principles is found in the ‘law of supply and demand’. This market force regulates what is produced, in what quantity and at what price. It is competition amongst the ‘suppliers’ – whether of a given product or service – which holds prices down, and keeps quality up.

The Competition Act 1998 contains an array of provisions which address practices in trade and industry likely to have an effect on the benefits to society of having competitors involved in the supply of products and services. The Act regulates against price fixing, abuse of a dominant market position, tender collusion, merger, and so forth.

The Competition Commission and the Competition Tribunal are bodies set up by the Act to oversee and enforce the provisions of the Act, to investigate complaints about anti-competitive conduct, and to approve or disapprove mergers. The officers of these bodies have wide powers of investigation.

A. Prohibited practices

One type of activity which is prohibited is called a restrictive horizontal practice’. This is an agreement (whether a contract, arrangement or understanding) or co-operative or co-ordinated conduct1 between competitors,2 which, basically, has the effect of preventing or lessening competition in a market. An example would be different bread manufacturers who agree to maintain the price of loaves at a certain level.

  1. The Act makes it a criminal offence3 for any person who is a director of a firm, or has management authority in a firm, if he caused the firm to enter into an agreement or concerted practice which:
    • directly or indirectly fixes a purchase price, or a selling price, or any trading condition;
    • divides markets by allocating customers, suppliers, territories, or specific types of goods or services;
    • involves collusion on tendering.
  2. It is also a crime, if you are a director or manager, to knowingly acquiesce (i.e. consent) in the firm engaging in such practices.4

B. Investigations and adjudications

  1. If you are summoned to attend a hearing of the Competition Commission or Tribunal, you must:
    • appear at the time and place specified; and
    • remain in attendance until excused.5

  2. It is a crime if you refuse to be sworn in, or to make an affirmation, or produce any book, document or other item (as subpoenaed) and answer any question fully and to the best of your ability, and it is a criminal offence if you fail to do any of these.6

  3. It is a crime to give false evidence or provide false information to the Commission.7

  4. If, as a result of initiating a complaint or participating in any proceedings in terms of the Act, you acquire confidential information concerning the affairs of any person or firm, it is a criminal offence to disclose it.8

  5. If you:
    • do anything likely to influence the Tribunal or Commission, improperly, concerning any matter connected with an investigation;
    • anticipate any findings of the Tribunal or Commission in a way likely to influence the proceedings or findings;
    • do anything in connection with an investigation that would have been contempt of court; or
    • interrupt the proceedings or misbehave during the hearing,

    you commit an offence.9

  6. It is an offence to defame the Tribunal or the Competition Appeal Court, or any of their members in their official capacities.10

  7. Last, but not least, if you fail to comply with any order of the Competition Tribunal or the Competition Appeal Court you commit a criminal offence.11

C. Officials

  1. It is an offence to disclose any confidential information concerning the affairs of any person or firm obtained in carrying out any function in terms of the Act.12

  2. It is an offence to hinder, oppose, or unduly influence any person who is exercising a power or performing a duty under the Act.13

  3. If any official acts contrary to an enter and search warrant he commits an offence.14

  4. It is also a crime falsely to claim to have authority to enter or search premises, or to attach or remove any article or document.15

  1. Referred to as ‘concerted practice’. ↩

  2. In other words, they are in a ‘horizontal’ relationship with each other as opposed to a ‘vertical’ relationship, which is that between a firm and its suppliers or its customers. ↩

  3. Section 73A(a). ↩

  4. Section 73A(b). ↩

  5. Section 71. ↩

  6. Section 71. ↩

  7. Section 72. ↩

  8. Section 69(1). ↩

  9. Section 73(2). ↩

  10. Section 73(2). ↩

  11. Section 73(1). ↩

  12. Section 69(1). ↩

  13. Section 70. ↩

  14. Section 73(2). ↩

  15. Section 73(2). ↩

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