Competition Law in South Africa
Competition law regulates how businesses compete in the South African market. Its purpose is to prevent conduct that harms competition, protect consumers, and ensure that companies compete on fair terms. The Competition Act of 1998 established three authorities—the Competition Commission, Competition Tribunal, and Competition Appeal Court—to investigate, adjudicate, and review competition matters.
South Africa’s system also considers public interest factors. This means the law looks not only at market power and pricing, but also at how business practices and mergers affect small firms, workers, and economic inclusion.
The Conduct That Creates Competition Law Risk
Competition authorities focus on behaviour that distorts how businesses compete. The law does not prohibit healthy rivalry—it targets conduct that manipulates markets, limits consumer choice, or harms smaller competitors.
For most companies, risk arises in three settings:
1. Communication with Competitors
Even informal conversations can create exposure. Sharing future pricing, customer lists, discounts, or market plans can be treated as collusion, even without a written agreement.
2. Distribution and Pricing Arrangements
Suppliers may unintentionally impose restrictions on resellers. Setting minimum resale prices, forcing exclusivity without justification, or linking products can all raise concerns.
3. Conduct by Dominant Firms
A business with strong market power must exercise greater caution. Selling below cost, refusing to supply without legitimate reasons, or terms that exclude competitors can lead to enforcement action.
Understanding these risks is essential because intent is not always required—certain conduct is unlawful by its nature.
How Competition Authorities Investigate
Competition cases begin when the Commission receives a complaint, conducts market screening, or identifies suspicious patterns through industry monitoring.
Once an investigation begins, authorities may:
- Request documents and data - Contracts, emails, internal policies, and pricing records are commonly examined.
- Interview staff or request written explanations - Statements made during this stage can shape the entire case.
- Conduct a dawn raid - Investigators may arrive unannounced with authority to access premises, servers, and devices within the scope of their warrant.
- Refer the matter to the Tribunal - If evidence supports a finding of harmful conduct, the Commission may seek penalties, behavioural remedies, or corrective orders.
Investigations often take months and require careful handling. Many businesses face unnecessary risk because they do not understand their rights, obligations, or the limits of the investigators’ powers.
Warning Signs Inside a Business
Competition law breaches rarely start with a deliberate plan. They arise from habits, assumptions, or unchecked internal practices. Recognising early warning signs helps businesses avoid escalation.
Problematic Communication Patterns
Emails or notes referencing “alignment”, “market stability”, or “avoiding price wars” may be interpreted as signalling anti-competitive intent. Staff should avoid language that suggests coordinated strategy.
Pricing and Discount Practices Without Clear Rationale
Sudden pricing changes, unexplained discounts, or selective rebates can raise concerns. Authorities scrutinise discount structures that disadvantage customers or competitors.
Exclusive Contracts Without Justification
Exclusive supply or distribution agreements may be legitimate, but when used without a clear rationale they can appear restrictive. Agreements should be reviewed and supported by documented reasoning.
Market Power Treated Casually
Dominant firms must exercise greater caution. Refusals to supply, changes in terms, or below-cost pricing require careful legal assessment.
These indicators do not prove wrongdoing, but they signal areas needing review. Many enforcement matters originate from internal practices that were overlooked until regulators became involved.
What to Do If You Suspect a Competition Law Violation
Businesses often uncover potential issues through internal audits, staff disclosures, or irregular pricing patterns. Immediate and informed action is essential.
- Conduct an Internal Review - Identify the facts objectively. Establish who was involved and what occurred before reaching conclusions.
- Preserve All Relevant Information - Do not delete emails, drafts, or records. Destruction of information may be treated as obstruction.
- Seek Legal Counsel Immediately - Competition matters are sensitive. Early legal guidance is essential before speaking to staff, competitors, or authorities.
- Maintain Confidentiality Internally - Limit discussion to essential personnel. Unnecessary commentary creates risk and complicates investigations.
Acting early and decisively can significantly influence outcomes. Cooperation is valuable when handled correctly.
VDM Attorneys – Competition Law Attorneys
VDM Attorneys provides informed guidance on matters involving South African competition law. Our team helps clients understand their obligations, respond to regulatory processes, and make decisions with clarity in a regulated commercial law environment.