Comparative appraisal of divestiture as a remedy under the Competition Act 89 of 1998

Abstract

When competition law is contravened the question inevitably arises as to what would constitute an appropriate remedy and whether such remedy should be structural or behavioural in nature. Especially in the context of merger regulation structural remedies can play a significant role in restoring a market damaged by the anti-competitive effects of a merger to its pre-merger competitive status. It is in this regard that divestiture as a structural remedy is especially useful. In South Africa however divestiture as a remedy has not yet received that much attention and there is a dearth of literature on the topic itself. This dissertation therefore aims to investigate the concept of divestiture as set out in section 60 of the Competition Act 89 of 1998 and examine the cases in which it has been applied (i.e. merger cases and also one prohibited practice case) in order to extract some principles that may aid in understanding the application of the remedy of divestiture better. It also looks at the application of the divestiture remedy in the EU as comparative jurisdiction. Specific attention is also given to the risks associated with the remedy of divestiture and how to best deal with these risks. Finally some conclusions are reached and recommendations are made.