Excessive pricing in South African competition law: Elucidating the nature and implications of the consumer-detriment requirement

Authors Ryan David McKerrow

ISSN: 1996-2185
Affiliations: None
Source: South African Mercantile Law Journal, Volume 29 Issue 2, 2017, p. 173 – 218


Section 8(a) of the Competition Act prohibits dominant firms from charging excessive prices to the detriment of consumers. In Harmony v Mittal the Competition Tribunal took the position that the provision’s reference to consumer detriment was ‘simply a superfluous description of an excessive price rather than a qualifier of its likely effects’. This article challenges the Tribunal’s relatively static approach to consumer detriment. It acknowledges that the incorporation of a consumer-detriment requirement into section 8(a) not only safeguards dominant firms from prejudice, but also gives rise to a contextually appropriate consumer-welfare standard. The article argues that consumer detriment must be evaluated by means of an analysis which adequately accounts for market dynamics. Following a critical analysis of three pertinent arguments in favour of non-intervention—the self-correction, innovation, and error-costs arguments—it concludes that the welfare interests of current and future consumers are not always aligned. As such, net consumer detriment and an interventionist outcome cannot be the invariable fate of an excessive price. The appropriate outcome must therefore be determined on a case-by-case basis.