Competition Act South African Competition Act

Question: Discuss about theCompetition Actfor South African Competition Act. Answer: Introduction South African Competition Act is intended to eliminate anti-competitive practices in the market. The policy target to promote competition as well as improve the functioning of the businesses. The Competition Commission of this particular state is charged with the responsibility of investigating all anti-competitive claims reported (Mehta, 2012, p. 4). One of its recent investigation concerns the long-term exclusive lease which is not yet fully resolved. Although the Competition Act is necessary, this policy is not efficient in scope to sufficiently ascertain and remedy potential anti-competitive activities related to long-term exclusive leases. Exclusivity agreements fall under Sections 8(c) and 8(d) of South African Competition Act. According to these provisions, an agreement is only prohibited if its net effect curtails competition in the market (COMPETITION ACT, 2000, p. 21). While these sections endeavor to forbid the anti-competitive actions in the market, they are not sufficient and efficient in dealing with emerging issues relating to restrictive practices among business competitors in South Africa. Major supermarkets in South Africa have established and enforced exclusive leases which other supermarkets view as anti-competitive. The significant issue surrounding the exclusive lease treaties which the Competition Act does not cater for is the duration of the exclusive leases (Moodaliyar Roberts, 2012, p. 10). Therefore, the reliance on this sections of the Competition Act by the Competition Commission does not yield irrefutable evidence despite the findings of anti-competitive features in the exclusive leases. The anti-competitive effects of these agreements are evident in the long-term exclusive contracts. For example, the anchor or primary tenants use the exclusive leases to bar other businesses in the Shopping Centers. Usually, the landlord has to get the permission of the anchor tenant before dealing with other tenants. Such restrictions significantly affect the choice of the consumers concerning price, quality product range, and eventually curtail competition (Maboja, 2014). Besides, the quality of service is anticipated to be much better when there are rival stocks at the same shopping Centre. The anti-competitive effects are enormous especially when the leases are long term say 40 years with the possibility if renewal (Drexl, 2012, p. 66). Therefore, the silence of the Act on the duration of exclusive agreements makes the Competition Commission less productive in resolving the emerging issues appropriately. Moreover, the Act does not plainly make provision on the conduct retailers regarding the number of exclusive agreements that ought to be considered to have significant anti-competitive impacts in the market. For instance, in South Africa, some retailers like Shoprite, Spar, and Pick n Pay make exclusive lease contracts with many landlords of different shopping centers and hence hindering competition extensively (Competition Commission, 2017). In conclusion, the Competition Act plays a vital role in reducing and eliminating anti-competitive practices in South Africa. However, the policy is limited in scope to tackle emerging issues concerning fair competition in the market adequately. Long term exclusive lease agreements are among the critical problems that pose a challenge to the effectiveness of this regulation. For instance, the law does not cater for is the duration of the exclusive agreements. Reference List Competition Act, 2000. South Africa Competition Act, s.l.: s.n. Competition Commission, 2017. South African legislation and policy. [Online] Available at: www.compcom.co.za [Accessed 21 Feb 2017]. Drexl, J., 2012. Competition policy and regional integration in developing countries.. Cheltenham, UK: Edward Elgar. Maboja, W., 2014. Competition Commission concludes retail investigation. CBNCAfrica. [Online] Available at: https://www.cnbcafrica.com/news/southern-africa/2014/01/27/competition-commission-concludes-retail-investigation/ [Accessed 21 Feb 2017]. Mehta, P. S., 2012. Evolution of competition laws and their enforcement : a political economy perspective. New York : Routledge. Moodaliyar, K. Roberts, S., 2012. The development of competition law and economics in South Africa. Cape Town, South Africa: HSRC Press.