Anti-Competitive Behaviour in Business: Everything You Need to Know

Anti-competitive behaviour in business refers to actions taken by companies or individuals that hinder competition in the marketplace, such as engaging in collusion, price fixing, monopolistic practices, or abusing market dominance. These behaviours restrict or eliminate competition, resulting in reduced consumer choice, higher prices, and limited innovation, which can acquire a negative effect on the overall health and fairness of the market economy. Anti-competitive behaviour is typically illegal and regulated by competition laws in many countries around the world.

Africa’s competition laws are broadly similar to those of other major regions such as Canada, the European Union and the United States. In South Africa, an overarching law, the Competition Act, prohibits anti-competitive behaviour such as price-fixing and collusion between competitors, and the abuse of dominance.

Types of anti-competitive behaviour

Price-fixing is one of the most common forms of anti-competitive behaviour. This occurs when businesses agree to set prices at a certain level, either higher or lower than what would occur in a competitive market.

Monopolisation occurs when a single company dominates the market, either by controlling the supply of goods or by pricing its competitors out of the market. Monopolies can be harmful to consumers, who may be forced to pay higher prices for goods and services, and they can also reduce innovation, as the dominant company has less incentive to innovate or improve its products.

Collusion occurs when businesses work together to eliminate competition. Collusion can seize many forms, including agreements to divide markets, to restrict output, or to fix prices.

Exclusive dealing is another form of anti-competitive behaviour. This occurs when a business agrees to only execute business with one supplier or distributor, effectively shutting out competitors.

The effects of anti-competitive behaviour on the market can be severe. Anti-competitive behaviour can result in higher prices, less innovation and reduced consumer choice. It can also produce it harder for novel businesses to enter the market, stifling entrepreneurship and innovation.

The role of the Competition Commission in preventing and investigating anti-competitive behaviour

The Competition Commission in South Africa is empowered by the Competition Act, to investigate, control and evaluate restrictive business practices, abuse of dominant positions and mergers in order to achieve equity and efficiency in the South African economy.

Its purpose is to promote and maintain competition in South Africa in order to:

• promote the efficiency, adaptability and development of the economy;
• provide consumers with competitive prices and product choices;
• promote employment and advance the social and economic welfare of South Africans;
• expand opportunities for South African participation in world markets and recognise the role of foreign competition in the country;
• ensure that small- and medium-sized enterprises acquire an equitable opportunity to participate in the economy; and
• promote a greater spread of ownership, in particular, to increase the ownership stakes of historically disadvantaged persons.

To achieve its purpose, the Commission’s core functions are the following:

• implement measures to increase market transparency;
• implement measures to develop public awareness of the provisions of the Act;
• investigate and evaluate alleged anti-competitive conduct;
• conduct formal inquiry in respect of the general state of competition in a market;
• grant or refuse applications for exemption from the application of the Act;
• authorise, with or without conditions, prohibit or refer mergers of which it receives notice;
• negotiate and conclude agree orders; refer matters to the Competition Tribunal of South Africa (the Tribunal) and appear before the Tribunal when required;
• negotiate agreements with any regulatory authority to coordinate and harmonise the exercise of jurisdiction over competition matters within the relevant industry or sector, and ensure the consistent application of the principles of the Act;
• participate in the proceedings of any regulatory authority;
• advise and receive advice from any regulatory authority;
• review legislation and public regulations, and report to the Minister concerning any provision that permits uncompetitive behaviour; and
• deal with any other matter referred to it by the Tribunal.

How Caveat Legal can support your organisation

Competition Law is not only focused on competition issues – it includes public interest and social issues such as the promotion of small businesses, the interests of employees and black economic empowerment.

Our team advises on merger control and prohibited restrictive practices, as well as legal and regulatory competition law compliance in South Africa and other African jurisdictions. Set up a meeting with our experts in order to discuss your requirements.

To find out more or to contact our team, please visit our website at www.caveatlegal.com

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