The Commercial Case Law Index is a collection of judgments from African countries on topics relating to commercial legal practice. The collection aims to provide a snapshot of commercial legal practice in a country, rather than present solely traditionally "reportable" cases. The index currently covers 400 judgments from Uganda, Tanzania, Nigeria, Ghana and South Africa.
Get started on finding judgments that are relevant to you by browsing the topic list on the left of the screen. Click the arrows next to the topic names to reveal a detailed list of sub-topics. Most judgments are accompanied by a short summary written by subject-matter expert postgraduate students from the University of Cape Town.
The court considered whether the South African Breweries (SAB), a dominant manufacturer and distributor of beer products, engaged in anti-competitive behaviour, by securing distribution agreements which constituted restrictive horizontal, alternatively, vertical practices in terms of s 4(1)(b)(ii) and s 5(1) of the Competition Act 89 of 1998 (‘the act’).
The commission challenged the distribution agreements and alleged that the SAB had contravened s 4(1)(b)(ii) of the act as a result of the exclusive territories awarded to appointed distributors (ADs) for distribution, amounting to a market division. The relationship between SAB and the AD’s were considered to determine whether they were competitors as contemplated in the act.
In applying the concept of ‘characterisation’ the pivotal question is a) whether the parties were in a horizontal relationship; and if so, b) whether the case involved the division of markets as contemplated in the act.
The court confirmed that, the ADs could not be seen to be autonomous economic actors, independent of the SAB, and were not in a competitive relationship with one another. Further, the true relationship was primarily a vertical one, encompassing a horizontal component, flowing from the vertical arrangement. The agreements did not amount to lessened intra-brand competition, preventing rival distributors from succeeding in the distribution within the market.
The court held that, there was not enough evidence to support the contention that the agreement had the effect of substantially preventing or lessening competition in the market, thus, there was no diminished consumer welfare supporting the prevention of competition in the market. The appeal was dismissed with costs.
The Competition Appeal Court considered whether the appellant’s pricing on polypropylene (PP) constituted excessive pricing and hence contravened section 8(a) of Competition Act 89 of 1998 (the act).
In establishing the proper interpretation of excessive pricing, the court looked at s 8(a) read with s1(1)(ix), placing more emphasis on the phrase ‘economic value.’ It considered domestic and foreign decisions and arrived at the determination that the pricing standard to be assessed should be the actual sale price and not a hypothetical price.
Regarding the economic value costing assessment, the court underscored the need to take into consideration costs that include depreciated insurance values related to capital costs; the tax effects, capital reward charges and common costs.
The court also looked at the reasonableness of the sale price when taken in relation to the economic value. It held that for s 8(a) to apply the price should be higher than economic value and should bear no reasonable relation thereto.
Acknowledging that the evaluation is a value judgement, the court rejected the Competition Tribunal’s assessment arguing that prices above economic value are not per se unreasonable. Instead, it held that conscious of the low nature of the price mark-up, there was no justification for judicial interference as this did not constitute a substantial increase.
The court thus concluded that the price did not constitute excessive pricing as required by the act. The appeal was therefore upheld.
The court considered whether a licensing agreement concluded between the parties, granting certain rights for a period of 5 years, amounted to a merger in terms of s 12(1) of the Competition Act 89 of 1998 (the act).
The focus was on whether the transaction would lead to structural changes in the market, thus, whether there is a reasonable chance that the transaction could impact on a competitive market outcome. It was argued that the transaction amounted to a transfer of the second respondent’s business, thus an acquisition of control. The court considered what is the appropriate test for acquiring or establishing direct or indirect control over the whole or part of the business for another was. Thus, in line with USA academic Professor Herbet Hovenkamp’s ‘Hovenkamp test’, the component of the business which was transferred must have constituted part of the business of the transferor, which has now been placed under direct or indirect control of the transferee.
The court held that, there had been no transfer of productive capacity which would amount to the transfer of market share, indicating that the transfer of the business could not have taken place within the realm of the license agreement. The court ordered that the commission was to give a report ascertaining whether there had been a change of control, and if it had, then the matter was referred back to the tribunal for determination.
The court held that, there was nothing in the agreement which amounted to a merger as defined in terms of the act. Appeal upheld.
The appellants are the only producers of andalusite in South Africa. The appellants notified the competition commission (the commission) of an intermediate merger in terms of s13A Competition Act 89 of 1998 (the act), which the commission prohibited. The competition tribunal (the tribunal) confirmed that prohibition. The appellants appealed to the competition appeal court (‘CAC’) contending that the merger should have been permitted subject to tendered conditions.
The CAC held that the tribunal ought to have relied on the s12A test where:
(i) it determined at first whether merger is likely to substantially prevent or lessen competition ;
(ii) whether the merger can or cannot be justified on substantial public interest grounds by assessing the factors set out in s12A(3) of the act; and
(iii) if the determination in (i) is ‘no’, the tribunal must determine whether the merger can or cannot be justified on substantial public interest grounds.
The CAC concluded that the merger was anti-competitive as it would give rise to a monopoly market. Additionally, the merging parties failed to portray any pro-competitive gains or public interest considerations which justified the merger. The appeal was therefore dismissed.
This application was in relation to a court order that the Competition Appeal Court (the CAC) granted in June 2016. This order held that the agreement between the first and second respondents did not give rise to a merger within the meaning of s 12(1) of the Competition Act 89 of 1998 (the act).
In the current application, the core issue to be resolved was the proper interpretation of the order granted by the CAC. Furthermore, evidence was sought to be led with regards to the parliamentary hearing that was conducted on 7 December 2016.
The CAC held that this order was clear and unambiguous. Accordingly it was not open to the CAC to give it a fresh interpretation or to supplement its meaning.
With regards to the parliamentary hearing, the CAC held that an order which would empower the commission to conduct interviews with both Mr Naidoo and Ms Makhobo fell outside the scope of the order it granted in June 2016. However, since the transcript of the parliamentary hearings was a public document, it found it not to be an obstacle to have the commission examine this transcript. The CAC held that whatever information contained in this transcript may be employed by the commission in order to make a recommendation as to whether the agreement falls within the definition of merger in terms of the act.
Competition – Unlawful Competition – Collusive Tendering – appropriate penalty
The case is an appeal by Media 24 Property Ltd which owns Forum and Vista community newspapers distributed in Welkom town against a decision of the Competition Commission Tribunal (the tribunal) which found that the selling of Forum newspaper in Welkom was predatory in contravention of s 8(c) of the Competition Act (the act). The tribunal ruled that the Forum newspaper was priced below the average cost to the detriment of other newspapers. In order to reach its decision, the tribunal employed the Average Total Cost concept (ATC).
On appeal, the appellant was challenging the use of the ATC concept as an appropriate benchmark for determining predatory pricing under the act. The court held that there are two tests for determining predatory pricing under s 8(d)(iv) being the benchmark of marginal cost and the Average Value Cost (AVC). It ruled that in order for the respondent (the commission) to show that the conduct of the appellant was predatory in nature, it needed to establish that the appellant is the dominant firm involved in selling goods below the marginal or (AVC). The court found that the ATC standard cannot be used to measure predatory pricing. It ruled that the Average Avoidable Cost (AAC) was the appropriate cost benchmark to determine predatory pricing. In light of evidence provided by the parties, the court found that the respondent failed to prove that Forum’s AAC exceeded its revenue hence the appeal was upheld.
Competition – Shareholders agreement – Non-compete clause – Whether a violation of horizontal restraints under the Competition Act
Competition - prohibited practices - quantifying a damages claim based on the finding of a tribunal
This case presented the first instance where South African labour courts were called to determine the relationship between a garden leave clause and a post termination restraint of trade clause where a contract of employment contained both.
The court considered whether the applicant had waived its right to enforce the notice period by terminating the first respondent’s employment with immediate effect and the reasonableness of the duration restraining the commercial activity of the first respondent in the garden leave clause and/or the post termination restraint clause.
The court held that the applicant was entitled to enforce the period of the garden leave and the post termination restraint of trade clause. The court adopted the rule that a garden rule provision should be taken into account when determining the reasonableness of the restraint duration. The court also took into account the seniority of the first respondent that exposed him to confidential knowledge of the applicant’s business and held that the cumulative restraint period of 12 months was reasonable.
Accordingly, the court granted the application and declared that the first respondent’s contract of employment terminated on 30 June 2016 and that he was restrained from disclosing any confidential information or engaging in any commercial activities with competitors until 31 December 2016.
The applicant brought a complaint against the defendants for contravening the market allocation prohibition of the Competition Act (the act) by entering into an ongoing agreement allocating market territory for the sale of locking products in both the Free State and Northern Cape. They sought to have the defendant’s conduct declared in contravention and consequently interdicted and charged with a 10% turnover administrative charge in respect of the contravention.
The first issue was whether the commission could allege market allocation for all products. Looking at the legislative powers of the commission, the Competition Tribunal reasoned that since the agreement’s subject matter covered all products the commission had authority therein.
The tribunal then considered whether the agreement was still ongoing after the coming into effect of the act and s 4(1)(b)(ii). It assessed the evidence and established that the defendants had not competed with each other since the entry into agreement until the time in issue and thus the agreement remained ongoing.
The final issue was whether the agreement’s rationale was in contravention of the section above. By looking at the ratio in American Soda Ash Corporation and Another vs. Competition Commission and Others  1 CPLR 1 (SCA) and The Competition-Commission and Pioneer Foods (Pty) Ltd, Case No: 15/CR/Feb07, the tribunal highlighted that s 4(1)(b)(ii)’s market allocation prohibition is a per se prohibition and thus there can be no justification for the conduct.
The agreement was held to be ongoing and in contravention of s 4(1)(b)(ii).
The matter involves a merger approval application for an already implemented merger between Media24 and Novus following concerns raised by Caxton and a consequent divestiture.
The Competition Tribunal first considered whether the merger had raised any competition concerns. It dealt with two concerns; information exchange and input foreclosure. In assessing the information exchange concern, the tribunal accepted the parties’ assertion that appointing non-operational persons to the Novus board would minimise the risk of information sharing.
Concerning the possibility of competitor foreclosure, the tribunal accepted that the lack of Novus’ competitors to absorb the foreclosed capacity gives more incentive for foreclosure. However, it reasoned that this incentive is countered by the divestiture which reduces media24’s control, both de jure and de facto, over Novus. Further, it noted that the other publications handled by Novus are not in competition with Media24 thus it would not need to foreclose.
The tribunal also considered if the merger raised public interest concerns, mainly whether the merger would negatively affect smaller businesses. It was stated that noting that there is reduced possibility of market foreclosure - conduct which would negatively impact these businesses, these concerns fell away. Moreover, it was noted that the merger would in fact positively impact B-BBEE shareholders of Media24 hence it positively served public interests.
The Tribunal therefore concluded that considering the divestiture and the absence of negative competition and public interests impacts, the merger transaction has to be approved.
This was an application to compel the Competition Commission of South Africa to produce a record of investigation.
The issue emanated from an investigation by the respondent on banks on allegation of collusive conduct in regard to trade in foreign currency. The applicant was one of the banks investigated. The applicant requested without success on several times for the record of investigation from the respondent. It then made an application to compel the respondent to provide the record.
The respondent opposed the application arguing that the applicant should have proceeded by way of review under Promotion of Administrative Justice Act (PAJA) because its action amounted to an administrative act. The applicant on the other hand argued that the commission’s conduct did not constitute administrative action and the tribunal should consider the application.
In deciding the matter, the Competition Tribunal held that the respondent action did not qualify as administrative action because it does not meet the requirement of finality. However, it found that the Competition Commission cannot be compelled to provide the requested record because of the complex nature of the process. It ruled that the respondent should provide the requested record during discovery.