Abstract:
A cornerstone of Anti-trust (Competition) regulation is a Prohibition on Abuse of Dominance; however, the question must be asked: what recourse does a multinational Dominant Firm have when a franchisee with an exclusive manufacturing agreement, conducts itself in such a way that the Dominant Firm is being commercially constrained and consumers are being disadvantaged, through the forced market exit of a large firm providing lower prices?
The dissertation looks at South African Competition Law provisions and international developments; and provides comment based on a hypothetical market scenario, aimed at assessing whether the current South African law provides adequate relief for Dominant Firms, should a franchisee become so powerful that it begins to constrain the Dominant Firm’s market growth.
The hypothetical scenario touches on the relationship between the franchisees that is created by the Dominant Firms’ vertical agreements, and considers if the franchisees conduct on the one hand lessened intra-brand competition for the Dominant Firms products, and on the other hand, if the arrangement created by the vertical agreements in fact amounted to collusion by dividing and controlling markets.
The value in this research lies in the fact that there are conflicting commercial interests that exist in the marketplace; and Competition policies could interfere with a firm’s rights to freedom to contract. It is envisioned that the South African legislature will in time, be put under pressure to step up regulation in this space, should South Africa want to position itself as an attractive market for investors to expand their businesses.
