Economic efficiency is used as a proxy for the social welfare of a country's citizens and
therefore it is held that if the efficiency of a country improves, so will the social welfare of
its citizens. The efficiency of markets determine a country's overall efficiency and social
welfare and as a result, the purpose of Competition Law has generally been to increase
the efficiency of a county's markets. The efficiency of markets in turn, is increased by
competition and therefore, Competition Law is generally aimed at maintaining and
promoting competition, which is also the case in South Africa. Stated differently, efficiency
is the purpose of Competition Law and competition the vehicle by which efficiency is
enhanced.
Central to Competition Law is the concept of the âefficiency defence.â In terms of the
efficiency defence, efficiencies are used to justify conduct that limits competition within a
relevant market (anti-competitive conduct). The general presumption is that anticompetitive
conduct is detrimental to efficiency. This is not always true and in some
instances anti-competitive conduct may in fact result in increased economic efficiency. The
efficiency defence is the tool used to justify anti-competitive conduct in circumstances
where limiting competition will result in increased economic efficiency. Despite the obvious
flexibility the efficiency defence provides to competition authorities in their quest to
enhance the efficiency of an economy, most jurisdictions have been reluctant to accept
efficiencies as a defence against anti-competitive conduct.
The South African Competition Act is still in its infancy and as a result, there are a number
of grey areas pertaining to its interpretation and application. One of these areas of
uncertainty pertains to the interpretation and application of the efficiency defence in South
African competition matters. To date, the competition authorities have only once
interpreted the efficiency defence and that was in the merger between Trident Steel (Pty)
Ltd and Dorbyl (Pty) Ltd, more than 11 years ago.1174 This study contributes to the legal
certainty pertaining to the interpretation and application of the efficiency defence in South African competition matters by making certain recommendations on its interpretation and
application. These recommendations are based upon a comparison between South
African, US and EU Competition Law jurisprudence. In addition, all recommendations are
in line with contemporary economic theory, which functions as the validating criterion.
The principle recommendation of this study is the recommendation that the consumer
welfare standard should be employed in South African competition matters instead of the
total welfare standard currently employed. This recommendation is based upon the South
African economic environment which includes high levels of market concentration and high
price mark-ups in the manufacturing industry. The implications of using the consumer
welfare standard will be that the burden of proof to discharge in the efficiency defence is
much higher than it is under the total welfare standard. The reason being that under the
consumer welfare standard consumers have to benefit from efficiencies for them to be
able to justify anti-competitive conduct whereas it is not the case under the total welfare
standard.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:ufs/oai:etd.uovs.ac.za:etd-06142013-150815 |
| Date | 14 June 2013 |
| Creators | Marais, Adam Johannes |
| Contributors | Mr P Brits, Mrs K Kitching |
| Publisher | University of the Free State |
| Source Sets | South African National ETD Portal |
| Language | en-uk |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.uovs.ac.za//theses/available/etd-06142013-150815/restricted/ |
| Rights | unrestricted, I hereby certify that, if appropriate, I have obtained and attached hereto a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to University Free State or its agents the non-exclusive license to archive and make accessible, under the conditions specified below, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report. |
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