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South African competition authorities shift focus following coronavirus outbreak

By Janine Simpson and Werner Rysbergen

The novel coronavirus COVID-19 pandemic has caused a public health crisis and has significantly impacted global financial markets. The virus has also had an unprecedented impact on South Africa, with the local currency (ZAR), stock market (JSE) and businesses of all sizes suffering as the national lockdown, travel restrictions and factory closures disrupt output, supply chains, customer demand and investor confidence.

The South African Government has announced a range of measures to combat the financial impact of coronavirus COVID-19 (A copy of the announcement) The measures include:

  • the publishing of regulations which aim to prevent the charging of excessive prices for medical goods, basic food and consumer items; and
  • exemptions for designated sectors of the South African economy from i) the anti-cartel provisions of the Competition Act and ii) agreements or practices which have the effect of lessening competition. These block exemptions only apply where the agreement or practice is undertaken at the request of or in coordination with the relevant government department and for the sole purpose of responding to the COVID-19 disaster.

Consumer and Customer Protection and National Disaster Management Regulations and Directions

(A copy of this regulation)

Price increases of certain medical goods/services, basic food and consumer items which:

  • do not correspond to or are not equivalent to the increase in the cost of providing the good or services or; and
  • increase the net margin or mark-up on that good or service above the average margin or mark-up for that good or service in the three month period to 1 March 2020

indicates prima facie that the price is excessive and may be in contravention of the abuse of dominance provisions in the Competition Act.

Block Exemption for the Healthcare sector

(A copy of this regulation)

The Block Exemption exempts a specific range of agreements and/or practices between:

  • competitors; and
  • suppliers and customers

which would otherwise have contravened the Competition Act. The Healthcare Block Exemption covers hospitals and healthcare facilities, medical suppliers, medical specialists and radiologists, pathologists and laboratories, pharmacies and healthcare funders.

Block Exemption for the Retail Property sector

(A copy of this regulation)

The Block Exemption exempts the following agreements or practices between designated retail tenants and property landlords with the aim of ensuring the survival of the retail tenant:

  • payment holidays and/or rental discounts for tenants;
  • limitations on the eviction of tenants; and
  • the suspension or adjustment to lease agreement clauses that restrict the retail tenant from undertaking measures required to protect its viability.

Block Exemption for the Banking sector

(A copy of this regulation)

The Block Exemption aims to support businesses and private individuals to manage their finances and to enable the banking sector to manage the banking infrastructure (e.g. ATMs and payment infrastructure). Accordingly, banks, BASA and PASA are exempted from specific agreements or practices, which ensure that payment systems continue to operate and which relate to the debtor and credit management.

Block Exemption for the Hotel sector

(A copy of this regulation)

The Block Exemption exempts agreements or practices between firms providing short-term accommodation which relates to:

  • the identification and provision of facilities for persons to be placed under quarantine (including communication around capacity and utilisation); and
  • the pricing of accommodation for persons to be placed under quarantine.

Impact on the day-to-day operations of the competition authorities

The Competition Tribunal has issued a directive in terms of which it confirmed that no complex merger hearings will be heard during the lockdown period. Moreover, all compliant proceedings will be postponed sine die unless these relate to investigations carried out by the Commission relating to coronavirus COVID-19.

The Competition Commission has re-allocated resources to focus on the investigation of excessive pricing complaints - this is likely to result in a delay in the processing of merger applications and complaint investigations. The Competition Commission has issued a statement discouraging the filing of complaints unrelated to coronavirus COVID-19 as well as all merger transactions except those involving failing firms or those firms in distress, during the lockdown period. As of 24 March 2020, the Competition Commission has received over 20 complaints of excessive pricing of essential products such as face masks, toilet paper and sanitizers. The Competition Commission has launched an investigation into allegations of excessive pricing by 11 retailers in the country since the outbreak of coronavirus COVID-19.

For any queries relating to the regulations or for more information about our South African competition practice and services please contact: