The assessment of excessive pricing: before, during, and after COVID-19
The prohibition of excessive pricing is the most controversial contravention in the Competition Act 89 of 1998. The publication of Babelegi Workwear and Industrial Supplies CC and DisChem Pharmacies Limited, by the Competition Tribunal of South Africa (“Tribunal”) and subsequently the Competition Appeal Court (“CAC”) in 2020 has brought the assessment of excessive pricing under the limelight. This is because competition authorities, in their assessment of dominance and market power, departed from existing precedent and stood in contrast with international best practice and guidance provided by the European Commission and the Organisation for Economic Co-operation and Development (“OECD”). The implications of such departures can prove detrimental to future cases of excessive pricing and the assessment thereof. For instance, by departing from traditional approaches to assessing excessive pricing and leaning more toward price gouging, the Tribunal and CAC have created uncertainty and made it difficult for firms to internally assess their conduct against relevant benchmarks. In this regard, the fundamental question that arises when considering the post-COVID-19 era is whether cases prosecuted during the COVID-19 era can be used as precedent for post-COVID-19 prosecutions. It will be interesting to see what impact, if any, the COVID regulations have on post-COVID jurisprudence, as well as whether there is a general increase in prosecutions during normal market conditions. It will be particularly interesting to see if competition authorities continue to embrace the concept of price gouging despite claims that it does not exist in our law.
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