Nortons Inc July 2018 News

18 July 2018|In Competition Briefs eBriefs

In this edition:

  • Revised Competition Amendment Bill tabled before Parliament
  • The European Commission fines Google a record €4.34 billion for Android antitrust violations

The European Commission fines Google a record €4.34 billion for Android antitrust violations

On 1 December 2017, the Minister of Economic Development published the Competition Amendment Bill for public comment.  Following the expiry of the period allocated for public comment, the Minister then tabled the revised Competition Amendment Bill before Parliament.

The stated objective of the revised Competition Amendment Bill, similar to that of the 2017 Bill, is to remedy structural defects in the South African economy, such as high levels of concentration, by protecting and stimulating the growth of small and medium businesses as well as firms owned and controlled by historically disadvantaged persons.  However, the revised Competition Amendment Bill has also introduced additional objectives.  These include strengthening the penalty regime; introducing greater flexibility in the granting of exemptions which promote transformation and growth; making provision for National Executive intervention in respect of mergers that affect the national security interests of the Republic; and providing the Commission with the power to conduct impact studies.

The revised Competition Amendment Bill proposes to increase the maximum administrative penalty from 10% to 25% of an infringing firm’s annual turnover in the Republic and its exports from the Republic during the firm’s preceding financial year, if the conduct is substantially a repeat by that firm of conduct previously found by the Competition Tribunal to be a prohibited practice.  The revised Competition Amendment Bill also makes provision for an administrative penalty to include the turnover of any firm or firms that control the respondent, where the controlling firm or firms knew or should reasonably have known that the respondent was engaging in the prohibited practice.

In addition, a number of substantial amendments are proposed to the current abuse of dominance provisions.  The revised Competition Amendment Bill proposes an amendment to the current excessive pricing prohibition by prohibiting a dominant firm from charging an excessive price to the detriment of customers instead of “consumers”.  Furthermore, the revised Competition Amendment Bill proposes that, if there is a prima facie case of abuse of dominance because the dominant firm charged an excessive price or required a supplier to sell at a price which impedes the ability of the supplier to participate effectively, the dominant firm must show that the price was reasonable.

The revised Competition Amendment Bill also proposes lowering the prosecutorial burden of proof in price discrimination cases.  The relevant amendment states that it is prohibited for a dominant firm to engage in price discrimination if it is likely to have the effect of preventing or lessening competition, thereby removing the current qualifier of substantially preventing or lessening competition.

Furthermore, the revised Competition Amendment Bill, in line with the 2017 Bill, proposes a number of substantial amendments to the Competition Act’s provisions dealing with market inquiries.  The revised Competition Amendment Bill states that “an adverse effect on competition is established if any feature, or a combination of features, of a market for goods or services impedes, restricts or distorts competition in that market”, thereby introducing a new “adverse effect” test for market inquires.  In addition, the revised Competition Amendment Bill proposes that the Commission may, in relation to each adverse effect, take action to remedy, mitigate or prevent the adverse effect on competition, including a recommendation to the Competition Tribunal that a divesture order be imposed.

The revised Competition Amendment Bill has also proposed the insertion of a provision facilitating the intervention of the National Executive in merger proceedings which may have an adverse effect on national security interests of the Republic.  A committee (to be constituted by the President) may, after determining whether the proposed merger will have an adverse effect on national security, make a decision prohibiting the implementation of the merger or permitting notification of the merger (with or without conditions) to the Commission.

The revised Competition Amendment Bill proposes a number of other amendments not dealt with above.  Should you wish to obtain further information on these or the amendments discussed above, please contact Nortons Inc.


 

Revised Competition Amendment Bill tabled before Parliament

The European Commission has fined Google a record €4.34 billion for abusing its dominant position in the Android mobile operating system.

The European Commission has found that Google has imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search. Commissioner Margrethe Vestager, in a press conference earlier today stated that the case is, “about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine. In this way, Google has used Android to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere.

The record fine takes into account the duration and gravity of the infringement. The European Commission’s decision requires Google to bring its illegal conduct to an end in an effective manner within 90 days of the decision.

The European Commission’s press release can be found at http://europa.eu/rapid/press-release_IP-18-4581_en.htm.