PRICE FIXING, BID RIGGING UNPACKED

 MBABANE – The Competition Commission Bill of 2018 has been updated to reflect current legal and economic thinking on conduct offenses.

Swaziland Competition Commission (SCC) Chief Executive Officer (CEO) Thabisile Langa explained that the bill differentiates between “hard core” offenses like price-fixing and bid rigging that were prohibited absolutely.

She said it then speaks to other vertical and horizontal agreements which may be anti-competitive but require further analysis to determine the harm caused by those agreements to fair competition within the economy.

Section 43 of the Competition Act sets forth “hard core” offenses (price-fixing, bid rigging, market allocation, and establishment of production quotas).
These offenses have been grouped in a single section because they are considered the “supreme evil” of competition law enforcement.
“They should be central in Eswatini’s competition enforcement priorities,” emphasised Langa.

She pointed out that Section 44 also concerns itself with other prohibited horizontal and vertical agreements. Langa said it contains a general prohibition on agreements that harm or prevent competition in a relevant market.

The CEO said these agreements were identified as either horizontal (such as between enterprises at the same level of production) or vertical (such as an agreement between a supplier and a customer). She mentioned that the section prescribes that these agreements, with two exceptions are to be judged by balancing the pro-competitive justifications, if any exist, against the anti-competitive effects.

As noted, Section 44 contains two exceptions. In the case of these exceptions, there is no need to conduct a detailed market inquiry or balancing act. Concepts such as “Collective refusals to deal” are one exception.
The other exception is “minimum resale price maintenance.”
Collective refusals to deal are horizontal agreements that often take the form of competing enterprises in a market, deciding collectively, that they will not do business with a particular supplier.

Minimum resale price maintenance is a vertical agreement which typically takes the form of a supplier telling its independent distributors (who are independent actors) the prices they must charge for particular products or services.
Sections 46 to 48 of the Bill also have been updated to clarify conduct that constitutes an abuse of dominance. Abuse of dominance is what is regarded as “single firm conduct” which involves a dominant firm in a particular market.

Section 46 introduces thresholds for the determination of a dominant position which the Competition Act did not have prior to the amendment. Sections 47 and 48 prohibits exploitative conduct (including excessive pricing), predatory conduct (including predatory pricing) and exclusionary conduct (such as requiring a customer or supplier not to deal with a competitor) when done by a dominant firm.

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