COMPETITION CONCERNS
JURISDICTION REPORT: SOUTH AFRICA
Christina Sabatelli-Capelo
DM Kisch Inc.
In order to extract value out of their intellectual property, proprietors employ various commercial strategies, ranging from licensing to entering into joint ventures and collaborative arrangements, which may at times be considered to be anti-competitive.
Competition Law in South Africa has received much publicity in
recent months due to the active participation and investigations of the Competition Commission and the latest findings of the Competition Tribunal. Te fame of the Competition Law was further fuelled by the recently enacted Competition Amendment Act, No. 1 of 2009, which brought with it some controversial issues of constitutionality.
Te Competition Commission—a statutory body empowered to investigate business practices and abuse of dominant positions—is focused on rooting out anti-competitive behaviour. Te commission has, in addition to implementing industry-wide investigations, also directed some of its attention to joint ventures that are being used by businesses to disguise and promote anti-competitive behaviour. Te commission has announced its concern that joint ventures are being formed as vehicles to facilitate collusion, which constitutes the act of working together with other businesses, usually in secret and in an anti-competitive way.
A joint venture is easily formed and is therefore at times a faster and more cost-effective way for businesses to effectively manufacture, market and/ or sell their products or services. A joint venture is a collaboration of skills and resources, and a sharing of risks, which makes it appealing for some businesses. Tese businesses usually share common interests and clients, and could in their efforts to promote the products and services of the joint venture be guilty of anti-competitive conduct, if they end up sharing crucial information about each other’s core businesses, and especially if they further co-ordinate their prices, allocate their customers or keep information from customers.
Te above practices have the effect of distorting or preventing competition and stifling the economy, in violation of Competition Law.
In some cases, joint ventures are formed to bid for tenders or projects. In these instances, the Competition Commission is concerned that the joint ventures may have been formed as a means to share information on prices, discounts, the identity of competitors and clients. Further to this concern, joint ventures have been found to submit uncompetitive bids, allocate tenders and even compensate losing bidders. Joint ventures are therefore encouraged, in terms of tender processes and guidelines, not to exchange any information with any other tender prior to the closing of tenders.
www.worldipreview.com
“THE COMPETITION COMMISSION— A STATUTORY BODY EMPOWERED TO INVESTIGATE BUSINESS PRACTICES AND ABUSE OF DOMINANT POSITIONS— IS FOCUSED ON ROOTING OUT ANTI-COMPETITIVE BEHAVIOUR. THE COMMISSION HAS, IN ADDITION TO IMPLEMENTING INDUSTRY-WIDE INVESTIGATIONS, ALSO DIRECTED SOME OF ITS ATTENTION TO JOINT VENTURES THAT ARE BEING USED BY BUSINESSES TO DISGUISE AND PROMOTE ANTI-COMPETITIVE BEHAVIOUR.’’
Te commission will approach the possibility of collusion on a case-to-case basis. Te central question is whether the effect of the joint venture is in fact impairing competition or whether the efficiency of the joint venture offsets the harm to competition.
Te Competition Commission is alert to collusive conduct between joint businesses. Terefore, a word of caution to the joint ventures that have a tendency to share too much information with each other: ensure compliance with the Competition Act and don’t share sensitive information.
christinas@dmkisch.com
World Intellectual Property Review March/April 2010
53
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