An analysis of the approaches used for establishing dominance in the United States European Union and South Africa

Abstract

When an allegation is made against a firm that it has engaged in conduct that is detrimental to consumers and competition as a whole within the particular market, it will first need to be established whether or not that firm can be said to be dominant in the market. Only a firm that is dominant within the market can act to an appreciable extent independently of its competitors and consumers. However, how is dominance established, especially within the American, European and South African markets? In order to answer this question, this dissertation will first seek to define the terms of dominance and market power in the context of the above markets. This enquiry will also focus on how the concepts of dominance and market power are related to each other. After these concepts have been defined and expanded, the process of establishing dominance in the United States, European Union and South Africa will be explored. The means of establishing market laid down in each market will then be critically compared with one another and the specific advantages and disadvantages of each will be expanded upon. South Africa is unique due to the fact that the establishment of dominance has been codified in the Competition Act and is dependent on the possession of certain prescribed market shares. The aim of this paper will be to determine whether the establishment of dominance can simply be linked to the possession and maintenance of large market shares or, does an accurate inquiry into dominance require taking into account a variety of factors, such as the barriers to entry or expansion the countervailing power of consumers. Once the deficiencies of the approach laid down by the Act have been established, and the specific goals which the Act seeks to achieve have been highlighted, a new alternative approach for the establishment of dominance will be proposed. This will be a less structured approach taking into account a variety of factors relevant to the case at hand. In this way the process of establishing dominance will be done on a case by case basis which will hopefully lead to more accurate determinations of dominance.