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.