Catch Up With Competition Law Now - May 2020

​​Taking stock of Covid-19 competition developments over May

On 19 May 2020, the Competition Commission (the Commission) presented a report to the Portfolio Committee on Trade and Industry (the Committee) and the Select Committee on Economic Development, Small Business Development, Tourism, Employment and Labour on its e​fforts to address price gouging of essential items during the period of national disaster. The Commission indicated that, since the beginning of the national disaster, it had received 1,354 complaints related to Covid-19 and pricing. The Commission provided feedback on pricing trends within the food market and noted that the depreciation of the rand has resulted in price increases for imported crops such as wheat and rice. The Commission anticipates that domestic maize prices will drop significantly as the new crop arrives in late May and that fresh produce prices are also expected to fall steadily due to a drop in demand from restaurants and constrained consumers since lockdown.

The Commission has also established a Joint Operations Team in collaboration with the National Consumer Commission (NCC) to streamline investigations and avoid duplication. Between 23 March 2020 to 12 May 2020, the NCC has received 2,533 complaints - 127 investigations have been taken forward and 29 investigations have been completed.

In terms of the Commission's enforcement efforts, to date, there are a total of 35 firms in the process of settlement and 15 settlement agreements have been confirmed.

In the first contested Covid-19 related excessive pricing case, on 1 June 2020, the Competition Tribunal (the Tribunal) found Babelegi Workwear and Industrial Supplies CC (Babelegi) guilty of charging excessive prices for face masks. The Tribunal held that Babelegi has not put up a rational and valid explanation for its successive and massive price increases and that one can reasonably infer that Babelegi had market power during the complaint period (31 January 2020 and 5 March 2020), since it behaved to an appreciable extent independently of its competitors, customers or suppliers. Babelegi was therefore found to be dominant and in breach of section 8(1)(a) of the Competition Act. The Tribunal has ordered Babelegi to pay an administrative penalty of ZAR76 040.

A decision in the second contested matter involving the Dis-Chem Group has not yet been finalised, while a third contested matter is expected to be heard by the Tribunal soon. On 28 May 2020, the Commission referred Caprichem (Pty) Ltd to the Tribunal for prosecution for allegedly charging excessive prices on 5L hand sanitisers. The Commission alleges that this increase constitutes a 91% increase in gross profit margin and 1918% increase in net profit margin. A date for the hearing is yet to be finalised.

The table below sets out the list of confirmed settlement agreements between parties and the Commission. In addition to administrative penalties and donations, parties have also agreed to reduce their margins and gross profits, desist from the excessive pricing conduct and implement competition compliance programmes.

 PartiesProducts/ industryAdministrative penalty / donation


Cilliers and Heunis Face masksDonation of the hand sanitisers, face masks and gloves amounting to the value of ZAR 25 410.00 to two old aged homes situated in Boksburg
2Main HardwareSurgical gloves Refund all its customers who bought boxes of surgical gloves for the higher price - where customers cannot be traced, the refundable amount will be donated to the Solidarity Fund
3Evergreens Fresh MarketFresh produce Donation of hand sanitisers to the value of ZAR1 800 to Tembisa Provincial Hospital
4MatusPersonal protective gearSettlement amount of ZAR 5 949 542 and a donation to the Solidarity Fund
5Van Heerden Pharmacy Group (Nelspruit)Face masksSettlement amount of ZAR 30 000
6Van Heerden Pharmacy Group (PTA)Hand sanitisersDonation of ZAR 3 875 to the Solidarity Fund
7Mandini PharmacyFace masksDonation of essential goods amounting to ZAR 300 to Mandeni Child Welfare
8Domoney Brothers Bloemfontein (Pty) Ltd Face masksDonation of ZAR 30 040 to the Solidarity Fund and a donation of face shields worth ZAR 30 040 to the Carel du Toit School for the Deaf, the Universitas Hospital and the Pelonomi Academic Hospital in Bloemfontein
9Sanua CC t/a Naturally Yours Weleda PharmaciesHand sanitisersDonation of ZAR 18 750 to the Solidarity Fund
10Retrospective Trading 1999 t/a Merlot PharmacyHand sanitisers and facial masksDonation of ZAR 16 832 to the Solidarity Fund
11Retrospective Trading 200 CC t/a Seaside Pharmacy Face masks and hand sanitisersDonation of ZAR 4 168 to the Solidarity Fund
12Sicuro Safety CC and Hennox 638 CC t/a Hennox Supplies FPP1 face masksThe two related companies will jointly pay an administrative penalty of R 1.5 million and contribute ZAR 200 000 to the Solidarity Fund
13Sunset Pharmacy CCFace masksDonation of ZAR 8 640 to the Solidarity Fund
14Cedar Pharmaceuticals CC t/a Bel-Kem PharmacyDettol Antiseptic LiquidDonation of ZAR1 059.10 to the Solidarity Fund
15Manhattan Cosmetics CCHand sanitisersDonation of hand sanitisers to the value of ZAR 612 to the Durban Child and Youth Care Centre

Local News

Mining: Chrome Production / LCM merger conditionally approved

The Commission conditionally approved Chrome Production Holdings (Pty) Ltd's (CPH) acquisition of Lanxess Chrome Mining (Pty) Ltd (LCM). CPH produces foundry, chemical, and metallurgical grade chrome concentrates. LCM produces chrome ore and beneficiates some chrome ore into chrome concentrate. Although the Commission was concerned that LCM may need to undertake retrenchments, the merger parties expressed their intention, subject to certain commercial considerations, to increase the workforce of the LCM mine after the implementation of the proposed transaction. Accordingly, the merger was approved subject to the condition that the merger parties implement their employment commitments.

Industrials: Tribunal approves variation to Foskor consent agreement

The Tribunal approved a variation to a 2011 consent agreement between the Commission and Foskor (Pty) Ltd (Foskor) in relation to alleged excessive pricing of phosphoric acid. The variation amends Foskor's pricing policy as set out in the 2011 consent agreement, to reflect that Foskor will be allowed to charge domestic customers a price that is reasonably related to the economic value of the goods, as long as such pricing is in accordance with the Competition Act.

Regulatory: Final Buyer Power Guidelines published

The Commission issued final Buyer Power Guidelines. Our e-alert on this important development is available here. Earlier this year, the new buyer power provisions of the Competition Act came into effect. These provisions prohibit dominant buyers in designated sectors from imposing unfair prices or trading conditions on small and medium enterprises (SMEs) and firms owned and controlled by historically disadvantaged persons (HDP). The Guidelines seek to provide clarity to dominant buyers and SME / HDP suppliers as to how the new buyer power provisions will be enforced by the Commission, and will serve as an essential point of reference for firms to assess risk and guide compliance.

Retail: Updates & developments

  • The Tribunal dismissed a case of alleged price-fixing and collusive tendering against five Bloemfontein-based companies. Catha Silkscreen Printers CC, Melemo Trading CC, Lounge 848 CC, Nakanyane Business Solutions CC and V Litabe and Seema Trading CC were accused of colluding on a Free State Treasury tender to supply and deliver office stationery to provincial government departments in 2014. The Tribunal noted that there was no evidence that the companies had reached an agreement among themselves, and that the Commission led no evidence to support its concerted practice argument.


  • The Commission referred an agreement with Shoprite Checkers (Pty) Ltd (Shoprite) to the Tribunal to be confirmed as an order. In terms of the agreement, Shoprite has agreed to no longer enforce the exclusivity clauses contained in various lease agreements against SMEs and specialist line stores with immediate effect. Shoprite has also agreed to immediately cease exclusivity against other supermarkets in non-urban areas and not to sign any new lease agreements that contain exclusivity clauses. The agreement is in line with the recommendations of the Grocery Retail Market Inquiry report released in November 2019.


  • The Commission conditionally approved Elanco Inc.'s (Elanco) acquisition of Bayer's Animal Health business (BAH). Elanco markets and develops a selection of animal health products globally. BAH develops, produces and markets both prescription and non-prescription veterinary products. The Commission found that the merger will result in a substantial lessening of competition in the market for anticoccidials for sheep and cattle in South Africa. The merger was approved subject to the condition that the merger parties divest one of their products in this market segment. The Commission also imposed a condition that there will be no merger specific retrenchments for at least two years.

Technology, media and telecommunications: Cell C asset acquisition

The Tribunal conditionally approved Gatsby SPV's acquisition of certain assets of Cell C. Gatsby SPV will be controlled by a trust that is yet to be formed. The Commission is of the view that the proposed transaction may raise competition concerns, such as anticompetitive information exchange, should the trustees appointed to the trust include individuals from firms that compete with Cell C or present undisclosed competitive overlaps which were not considered in the assessment of the proposed transaction. As such, the Commission recommended that the proposed transaction be approved subject to the condition that Gatsby SPV and/or the trust will not be owned or controlled by companies that compete or may potentially compete with Cell C or firms that have a customer-supplier relationship with Cell C.


Rest of Africa News

Eswatini: Extension of adjournment of investigations

The Eswatini Competition Commission (ECC) extended the period of adjournment of all its investigations. Previously, the ECC had notified the public of an adjournment period from the date of the partial lockdown until 21 April 2020. The ECC has now declared that the adjournment will continue until the Eswatini government declares an end to the partial lockdown.

Kenya: Updates & developments

  • The Kenyan Competition Tribunal (KCT) has made its first decision involving the review of merger conditions. In October 2019, the Competition Authority of Kenya (CAK) approved the merger between Airtel and Telkom Kenya subject to an extensive range of conditions relating to, among other things, the retention of employees, licensing and the ability of the merged entity to enter into sale agreements. Following a merger review application by the parties, the KCT amended or reversed six of the seven conditions imposed by the CAK. The KCT held that, among other things, the conditions relating to spectrum and licenses did not address any competition law concerns, the merged entity could dispose of up to 40% of its shareholding at any time during a five year period, and that at least 349 of the 674 employees should be retained.


  • The CAK has begun its investigation into possible contraventions of the Competition Act in the retail sector. The investigation will focus on delays in payment of suppliers without justifiable reasons. The CAK has issued a notice requesting further information from local suppliers which are owed payment by major retail supermarkets beyond a credit period of 90 days from the date of supply.

Malawi: Competition authority fines eight companies

The Board of Commissioners of the Competition and Fair Trading Commission (the Board) considered and adjudicated a total of 16 cases at its last extra-ordinary meeting. During the meeting, the Board imposed fines on eight pharmacies for unconscionable conduct, specifically excessive pricing, in contravention of the Competition and Fair Trading Act. The fines range between MK 500 000 (approximately ZAR11 800) and MK 2 million (approximately ZAR 47 000), and mainly relate to hand sanitisers, gloves and face masks.

Namibia: NaCC receives multitude of price gouging complaints

The Namibia Competition Commission (NaCC) provided an update on complaints from the public regarding significant price increases of various products in the wake of Covid-19. The NaCC's price movement analysis indicates evidence of price increases of over 1000% in respect of certain products. The NaCC has revealed that approximately 40% of the complaints pertain to food and basic consumer items. The NaCC is currently in the process of gathering information to assess the complaints and has stated that it will decide whether to proceed with formal investigations in due course.


International News

European Union: Updates & developments

  • The European General Court overturned the European Commission's (EC) decision to prohibit CK Hutchison Holdings Ltd's acquisition of O2 UK from Spain’s Telefonica in 2016. The EC prohibited the merger due to concerns regarding price increases and the possible reduction of market players from four to three. The General Court found that the EC had failed to prove that the merger could increase prices or harm competition.


  • The EC has waived the commitments made by Takeda Pharmaceutical Company Ltd to obtain clearance of its acquisition of Shire plc (Shire). In November 2018, the EC approved the acquisition, subject to the divestment of a biologic drug under development by Shire to treat inflammatory bowel diseases (IBD). The EC's investigation of the market revealed that several permanent, significant and unforeseeable developments took place during the divestiture process, affecting both the evolution of the competitive landscape in IBD treatments and the development of Shire's pipeline drug.

India: Google faces new allegations

It has been reported that the Competition Commission of India is investigating allegations that Google is abusing its dominance to promote its mobile payments app. The complaint alleges that Goggle displays its Google Pay app more prominently inside its Android app store in India, giving it an unfair advantage over competitor apps.

United Kingdom: Updates & developments

  • The Competition and Markets Authority (CMA) provided an update on the CMA Covid-19 Taskforce. From 10 March to 17 May, the CMA has been contacted more than 60 000 times regarding coronavirus-related issues. The CMA has written to 264 firms, accounting for over 3 100 complaints, in relation to price rises for essential products.


  • The CMA prohibited JD Sports Fashion plc's proposed acquisition of its close competitor, Footyasylum plc. The CMA concluded that this transaction would lead to a substantial lessening of competition nationally and that there would be fewer discounts available to consumers as well as a lower level of quality customer service.


  • The CMA prohibited Sabre Holdings Corporation’s proposed acquisition of rival airline booking engine Farelogix Inc. The CMA found that the merger would lead to decreased innovation, fewer new features and potentially higher fees, and concluded that these effects would negatively impact airlines, travel agencies and UK passengers.

United States of America: Updates & developments

  • The Department of Justice (DOJ) announced that Apotex Corp. (Apotex), a generic pharmaceutical company was charged with fixing the price of the generic drug pravastatin. According to the one-count felony charge, Apotex and other generic drug companies agreed to increase and maintain the price of pravastatin, a commonly prescribed cholesterol medication that lowers the risk of heart disease and stroke. The company agreed to pay a criminal penalty of USD24.1 million (approximately ZAR419 million) and admit that it conspired with other generic drug sellers to artificially raise the price of pravastatin.


  • Makan Delrahim, an official at the DOJ, has provided his views on a proposal to impose a moratorium on large corporate mergers during the Covid-19 pandemic. Mr Delrahim indicated that this approach would be “misguided" since such transactions may be necessary in order to provide companies with liquidity and ensure that workers keep their jobs. His statements were made subsequent to the proposal of "The Pandemic Anti-Monopoly Act" which would be enacted to "stop large corporations from exploiting the coronavirus pandemic to engage in harmful mergers".



Burton Phillips and Ahmed Rajan published an article in Without Prejudice titled, "Tribunal hearings in unprecedented times"


Shawn van der Meulen was interviewed on The Aubrey Masango Show on Radio702 to discuss excessive pricing regulation in a time of a pandemic- listen his interview here.


These materials are provided for general information purposes only and do not constitute legal or other professional advice. While every effort is made to update the information regularly and to offer the most current, correct and accurate information, we accept no liability or responsibility whatsoever if any information is, for whatever reason, incorrect, inaccurate or dated. We accept no responsibility for any loss or damage, whether direct, indirect or consequential, which may arise from access to or reliance on the information contained herein.

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Webber Wentzel > News > Catch Up With Competition Law Now - May 2020
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