Final Report - World Trade Organization

and greater spread of ownership are some of the
objectives of the South African Competition Act of
1998. These broad objectives reflect the fact that
competition law and policy are not stand-alone issues,
but are an integrated part of a country’s overall public
policy.
On the other hand these multiple objectives create
possibilities for lobbying by different stakeholders and
can lead to an inconsistent application of competition
law. In implementing competition law authorities
should certainly consider a country’s wider economic
and development policies and objectives, however
including them as objectives of the law itself suggests
that competition law is a tool for attaining them.
Arguably competition law and policy are not the most
apt tools for the promotion of employment or the
advancement of historically disadvantaged persons.
A focus on consumer welfare and economic
efficiency, while taking regard of other policies, might
therefore be preferable.
In general, the laws of the project countries are
comprehensive enough to deal with the variety of
practices and activities that infringe on competition
in their markets. The three key areas that the
competition laws in all project countries deal with
are (i) restrictive trade (or business) practices; (ii)
the control of monopoly power or a dominant position;
and (iii) mergers and acquisitions.
2. Restrictive Trade Practices should be
categorised in those that are prohibited per se
and those that are subject to a rule of reason,
case-by-case, approach with the onus, once anticompetitive
behaviour is established, on the
companies involved to justify them. Categorisation
into RTPs that are prohibited per se should be
rationalised.
With respect to restrictive trade practices all 7-Up
countries apply a ‘rule of reason’ analysis to at least
the majority of these cases. Although they are
deemed prima facie anti-competitive the majority
are not prohibited per se. Except for Sri Lanka the
onus to justify them is on the companies involved. In
Sri Lanka the competition authority must establish
that the practice is against the public interest. Placing
the onus on the companies involved seems a better
option to reduce the burden on the authorities.
Several countries prohibit a number of restrictive
trade practices per se. In general these practices
are considered to be the most serious restrictions on
competition. However, the reasons why a distinction
is made are not always clear. The Tanzanian and
Kenyan law, for instance, prohibit predatory pricing
and collusive tendering per se (i.e. persons engaged
in these practices shall be guilty of an offence),
whereas agreements to divide markets or refusal to
sell, which can be equally or even more damaging to
competition and consumers, are considered to be
legally unenforceable in a court of law. Persons
committing these kind of restrictive trade practices
are only guilty of an offence after they refuse to
comply with orders from the authorities to stop the
practices. This has caused much confusion, even
among enforcement agencies. Therefore the
categorisation of per se prohibited practices should
be rationalised.
3. The size of a company’s market share could
be the main factor in determining the existence
of dominance. However, other factors also need
to be taken into account.
When determining whether or not a company holds
a dominant position, the 7-Up countries heavily rely
on the size of that company’s market share. There
are, however, a number of difficulties in determining
a company’s market power by the size of its market
share. These include the question on how to define
the relevant market as well as market entry issues.
Very large market shares can in themselves be
evidence of a dominant situation. Where to draw the
line, however, is very much dependent on a country’s
specific circumstances. Although taking market
shares as the main factor in determining dominance
seems to be a good approach, especially given the
authorities’ capabilities, other factors need to be taken
into account to determine whether or not a company
is, to an extent, capable of operating independently
from its customers and competitors.
4. Some countries still follow a structure- oriented
approach in their competition law enforcement,
which may consider turning to a behavioural
approach.
In controlling monopoly power or a dominant position,
the countries have adopted a more or less behavioural
approach. It is not dominance itself that is prohibited,
but its abuse. The one notable exception to this is
Pakistan’s attitude towards the concentration of
‘personal’ power. Due to historical developments that
led to the concentration of wealth and power in the
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