South Africa

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Chapter XIV

SOUTH AFRICA

A. Sources and Basics of South Africa’s Competition Law

South Africa’s Competition Act (the Competition Act) came into

effect on September 1, 1999.1 The Competition Act regulates mergers

having an effect in South Africa, on the one hand, and prohibits

horizontal and vertical restrictive practices and the abuse of dominance,

on the other.2 Significant amendments to the Competition Act were

introduced in a Competition Amendment Act signed into law in 2009.3

On a jurisdictional level, the Competition Act applies to “all

economic activity within, or having an effect within,” South Africa.4

Insofar as the Competition Act applies to an industry or a sector of an

industry that is subject to the jurisdiction of another regulatory authority,

the Competition Act must be construed as establishing concurrent

jurisdiction. 5 Provision is made for the Competition Commission

(Commission) to negotiate agreements with other regulatory authorities

to coordinate and harmonize the exercise of any such concurrent

jurisdiction.6 The Competition Act specifically provides that any person

applying or interpreting the Competition Act may consider appropriate

foreign and international law. 7 While international case law is

considered, a significant body of domestic jurisprudence has developed

during first decade that the Competition Act has been in effect and the

authorities increasingly refer to and apply South African case law.8

1. Competition Act 89 of 1998.

2. Id. §§ 4-10.

3. Competition Amendment Act 1 of 2009 in 6632533 of 28 August 2009.

4. Competition Act 89 § 3(1).

5. Id. § 3(1A)(a).

6. Id. § 3(1)(1A)(a)-(b).

7. Id. § 1(3).

8. See COMPETITION COMM’N&COMPETITION TRIBUNAL,UNLEASHING

RIVALRY:TEN YEARS OF ENFORCEMENT BY THE SOUTH AFRICAN

COMPETITION AUTHORITIES (2009), available at http://www.comptrib.

co.za/Publications/Reports/unleashing%20rivalry.pdf.

416 Antitrust Issues in International IP Licensing Transactions

The purpose of the Competition Act is to maintain and promote

competition in the South African economy.9 In addition to the traditional

competition law objectives, such as promoting the efficiency,

adaptability and development of the economy, and providing consumers

with competitive prices, other socio-economic objectives of the

Competition Act include the promotion of employment, the advancement

of social and economic welfare, the enhanced participation of small and

medium-sized businesses, and the enlargement of the spread of

ownership, especially in favor of historically disadvantaged persons.10

The Competition Act does not provide a guideline for balancing or

reconciliating its various objectives. The competition authorities,

therefore, appear to have wide discretion when balancing or weighing

these objectives.11

The Competition Act provides for the establishment of three

enforcement agencies: the Commission, the Competition Tribunal

(Tribunal) and the Competition Appeal Court (CAC).12 The Commission

is the investigative body. A large number of complaints of prohibited

practices have been initiated and investigated by the Commission, which

is increasingly active in its efforts to detect and eradicate cartel activity.13

The Commission refers contraventions of the Competition Act to the

Tribunal for adjudication. Appeals from the Tribunal’s decisions may be

made to the CAC. An appeal from a decision of the CAC may be made

to the Supreme Court of Appeal (SCA), which is one of the two highest

courts of South Africa, the other being the Constitutional Court.14

Chapter 2 of the Competition Act addresses agreements and practices

that are regarded as restricting competition. The Competition Act makes

provision for the holders of IP rights to apply for exemption from

9. Competition Act pmbl. (“The people of South Africa regognise . . . that

an efficient competitive economic environment . . . will benefit all South

Africans”; and stating that the Act is being adopted “[i]n order to . . .

restrain particular trade practices which undermine a competitive

economy”).

10. Id.

11. David Lewis, Int’l Competition Network, The Role of Public Interest In

Merger Evaluation (September 28-29, 2002), available at

http://www.comptrib.co.za /Publications/Speeches/lewis5.pdf.

12. Competition Act §§ 19-43.

13. See COMPETITION COMM’N&COMPETI TION TRIBUNAL, supra note 8, at

37.

14. S. Afr. Const. § 167(3); see also COMPETITION COMM’N&COMPETITION

TRIBUNAL,supra note 8, at 6.