Regulation of excessive pricing in South African competition law

Abstract

The maximisation of consumer welfare by creating and maintaining a market which results in the most efficient and inclusive allocation of economic resources, as well as the production of goods and services at the lowest prices, has generally been acknowledged and accepted as the primary objective of competition law. This mini-dissertation will, as a focal point, provide an exposition of the then section 8(a) of the Competition Act 89 of 1998 as initially enacted and sections 8 (1)(a), 8(2), and 8(3) of the Competition Amendment Act 18 of 2018, which together regulate (pre and post-the amendment) excessive pricing in South Africa. Accordingly, dominant firms are prohibited from charging an excessive price that is to the detriment of customers. In terms of the Act, whether or not the price charged was excessive was initially determined against the economic value of the services or goods received. Following the amendment of the Act by the 2018 Amendment Act, the definition of “excessive pricing” relating to the concept of “economic value” has been substituted by an expanded text of considerations to be applied when determining whether or not a price is excessive. Ostensibly, this specific amendment emanated from an acknowledgment by the legislature of the practical complexities related to the concept of “economic value”, and the need to broaden the scope and to provide some practical guidance on the factors to be considered when determining whether a price is excessive relative to the competitive price. This mini-dissertation further discusses the jurisprudence from case law emanating from recent court cases on excessive pricing in South Africa. I will furthermore provide a critical analysis of the excessive pricing regulatory framework of the European Union and that of China to a limited extent, and accentuate the fundamental differences in the regulatory frameworks of these three jurisdictions.