On 16 October 2019, the Competition Commission published draft Price Discrimination and Buyer Power Enforcement Guidelines (collectively, the Guidelines) for public comment (accessible here and here). The Guidelines should be read in conjunction with the draft Price Discrimination Regulations and Buyer Power Regulations (collectively, the Regulations) published last week (our e-alert summarising key aspects, is accessible here).
The publication of the draft Guidelines is a significant step in finalising substantial amendments to the Competition Act 89 of 1998 (the Act) pertaining to buyer power and price discrimination. Both provisions seek to support fair participation in the economy by small and medium enterprises (SMEs) and firms controlled by historically disadvantaged persons (HDPs).
Overall, the Guidelines present the general principles that the Commission will follow in assessing whether alleged conduct contravenes the relevant sections of the Act. The draft Guidelines outline how the Commission intends to interpret the new provisions for enforcement purposes and how it will seek to screen and assess complaints.
The Guidelines usefully delve into detail on each element required to establish a contravention against dominant buyers or suppliers and, in some instances, provide illustrative examples to offer context. The Guidelines also contain a section setting out responses to frequently asked questions - this section aims to address some of the main concerns raised by stakeholders.
Even though the Regulations and Guidelines incorporate certain parameters which seek to narrow the categories of prospective complainants against dominant firms, the potential scope of application is still extensive. For instance, in terms of the new buyer power provisions, the Commission could allege that a firm is dominant within a purchasing market in one of the designated sectors e.g. a milling company (with less than 45% market share nationally) purchasing maize from farmers in surrounding areas. Similarly, the new price discrimination provisions could significantly restrict large sellers from offering volume discounts to different categories of purchasers.
Once finalised, the Guidelines will be an essential point of reference for firms to assess risk and guide compliance. Even at this early stage, firms should begin internal risk assessments to determine their own market position and whether suppliers or customers fall within the designated categories. Comments on the Guidelines are due by 15 November 2019.
