Zakhele Mthembu BA Law LLB (Wits) is a legal researcher at the Free Market Foundation.
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This article was first published by Dailyfriend.co.za on
5 August 2022
What does Competition Law in South Africa seek to achieve?
The objectives and ends sought by a particular piece of legislation are usually set out in the preamble. Yet, what happens when a law has multiple objectives that may seemingly conflict with one another? We discuss this matter in relation to the South African Competition Act of 1998.
The preamble of the Competition Act is long and quite expository. For our purposes, we will focus on the objective of creating free markets where consumers can freely choose and the objective of restraining certain anti-competitive trade practices.
In a case brought against SAA by Comair, the former was said to have abused their dominance in the domestic market through their trade practice of offering special perks to travel agents who freely chose their airline. This practice of inducing travel agents away from other airliners by offering perks was found by the Competition Tribunal to be an abuse of dominance and thus anti-competitive.
A trade practice that can be restricted therefore, is not criminal action per se but rather nonviolent or non-forceful actions that have the result of ensuring business success.
In the SAA case, the company which was found to be unjustly dominant or have abused their dominance by the commission and Tribunal was freely chosen by consumers, in that instance, travel agents in a market wherein they could have also chosen Comair or another company. The objective of markets that enable free choice seems to have clashed with the one requiring the restriction of anti-competitive trade practices.
Which objective from the preamble means more? Why should they mean more when there are substantive provisions? Wel,l as stated, the objectives, goals or ends sought by laws are important. As a rule of good jurisprudence, a law should stick to what it was created for, the problems it was drafted to solve or help adjudicate.
Therefore, in interpreting the substantive provisions of the Competition Act, it becomes important to contextualize them within certain ends which when passed, were envisaged by the legislature; those ‘ends’ being captured in a preamble or long title.
It is common cause to see legislation drafted for one reason ends up being used for a variety of reasons. Therefore, the objectives of the law found in its long title or preamble help to specify at the time of adoption what problems and thus envisaged ends the law seeks to solve and bring about.
With our problem of conflicting values, sound jurisprudence implores us to interpret law in a manner that would not give rise to it contradicting itself. Therefore, I would posit that there ought to be a singular overriding objective to tie the other ones to. A grand objective of the legislation under which others subsist would be understood through.
The overriding end sought by competition law domestically and internationally is freer, open markets where consumer choice is the dominating factor. The preamble of the Competition Act mentioning market concentration under the previous administrations in South Africa is within the context of the legislation opening markets and enabling the latitude for consumer choice.
State-enforced concentration in markets inhibits or distorts choice and the legislation seeks to above all else, widen the free choice of consumers in South Africa. That is the context under which the restriction of so called anti-competitive trade practices must be understood. Widening consumer choice as a broad principle is the context under which efficient and effective markets as well as effective participation in international markets is to be interpreted. All the principles in the preamble of the Competition Act, ought to be understood through the grand norm of consumer welfare.
An overriding grand objective would present a singular standard under which businesses can measure their various actions that may concern Competition authorities, against. From potential mergers to a certain trade practice, if the general objective of centring consumer choice is observed, then the certainty necessary in the Rule of Law would be present.
The above is not a magic bullet to solve the myriad of problems in competition law. It was an introduction to a case for a more sensible and sound interpretation of competition legislation. The constitutional value that is the Rule of Law necessitates certainty in law and is opposed to arbitrariness. Therefore, when objectives of the same legislation can be interpreted in diametrically opposite ways there is a Rule of Law constitutional problem.
The widening of consumer choice and the consequent of respecting those choices as a unifying objective of the legislation ought to be considered. If for nothing else (certainty in law thus complying with the Rule of Law or the improved economic performance coming from certainty in law), for enriching our Competition Law jurisprudence.