34. Competition Act

The Competition Act 89 of 1988 contains certain prohibitions to business practices that restrict competition as well as the abuse of a dominant position.

Practices that restrict competition: 

These restrictive practices deal with the relationship between a company and its markets and are presumed to exist between two firms unless:

  1. Company and its competitors in the market 
  • owns a significant interest in the other, or
  • the firms have at least one director in common, or
  • the firms have at least one substantial shareholder in common
  • a company and its solely owned subsidiaries belong to an economic entity having a similar structure.

The following practices are outrightly prohibited and do not require any effect on competition to be proven.

  • Directly or indirectly fixing a selling price or any other trading condition. (This does not refer to the price a property is being marketed for).
  • Dividing markets by allocating customers, suppliers, territories, or specific types of goods and services.
  • Collusive tendering.

An agreement between firms is prohibited if the agreement has the effect of substantially preventing, or lessening, competition in a market unless it can be proven that a technological, efficiency or other pro-competitive gain outweighs the anti-competitiveness effect of that agreement.

  1. A Company and its suppliers, or customers, or both, (This relationship does not apply to a relationship between competitors)

The following practices are prohibited outright and do not require any effect on competition to be proven.

  • The practice of resale price maintenance.
  • An agreement that has the effect of substantially preventing or lessening competition in a market
  • It is proven that a technological, efficient, or other pro-competitive gain outweighs the anti-competitive effect of that agreement.
  1. Abuse of a dominant position 

A firm is considered dominant if it possesses the ability to act independently of its customers, suppliers, or competitors.

If a firm is dominant it may not:

  • Charge an excessive price to the detriment of consumers
  • Refuse to give a competitor access to an essential facility when it is economically feasible to do so
  • Engage in any acts that impede or prevent a firm from entering into or expanding within a market (unless the competitive effect is pro-competitive)
  • Require or induce a supplier or customer not to deal with a competitor
  • Refuse to supply scarce goods to a competitor when supplying those goods is economically feasible
  • Engage in conditional selling that is unrelated to the object of the contract
  • Force a buyer to accept conditions unrelated to the object of a contract
  • Sell goods or services at below their average or marginal variable cost
  • Buy up a scarce supply of intermediate goods or resources required by a competitor.
  • Engage in any other act not listed above that impedes or prevents a firm from entering into or expanding within a market, and which act on balance has a provable anti-competitive effect.
  1. Price Discrimination 

The action of a dominant supplier, as a seller of goods or services, is prohibited if:

  • It is likely to have the effect of substantially preventing or lessening competition.
  • It relates to the sale of goods or services of like grade and quality, in equivalent transactions, to different purchasers and it involves discriminating between those purchasers by way of price, discount, allowance, rebate or credit, the provision of services, or payment of services in connection with the goods and services sold.

There are certain provisions in the Act that do not qualify as price discrimination if the supplier can prove so. These are listed in the Act.

Regarding the Competition Act,  the EAAB has issued the following notice to estate agents and their relationship with HOA’s (Homeowners Associations).

Annexure 32 – Practice note HOA revised 08 Sept 2014

Annexure 33 – Competition Act

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