Revisions to Competition Amendment Bill reflect Genesis submissions

The SA Competition Amendment Bill was tabled before Parliament on 11 July 2018. The Bill incorporates revisions to the draft Bill tabled in December last year. The Genesis submission on the draft Bill identified numerous areas where the amendments seriously risked chilling competition and harming consumers. Genesis proposed numerous changes to ensure appropriate economic tests whilst still addressing adequately the public interest concerns. The Bill tabled incorporates a large number of the Genesis proposals, including:

On abuse of dominance:

• Retaining the previous structure of the price discrimination (s9) provision, and dealing with small and historically disadvantaged firms (SME/HDI) through a separate sub-section rather than effectively outlawing discrimination entirely;
• Similarly limiting any buyer-power provision to largely SME/HDI firms, and removing the unworkable "excessively low price" test;
• The retention of a separate provision (s8c) for unspecified exclusionary abuses where the onus lies with the complainant; and
• The removal of long-run average incremental costs as a test for predation.

On market inquiries:

• Providing greater clarity on the appreciable effect on competition (AEC) test;
• Removing the requirement that every AEC must be remedied;
• Ensuring any remedies are subject to a proportionality test; and
• Providing greater procedural protection on market inquiries.

On merger control:

• A rewording of the merger creep provision; and
• Greater clarity on the interpretation of the ability of SME/HDI firms “to participate in” the market.

There remain certain elements to the Bill that continue to raise concerns from an economics perspective (such as the removal of the substantive requirement to the competition test under price discrimination), but there are also other elements that strengthen the current regime (such as the requirement to issue guidelines for some of the provisions).

Genesis will continue to engage on the substantive economic issues around the Competition Amendment Bill with the objective that competition law is strengthened and adequately addresses the public-interest concerns articulated in the preamble to the Act.

Submissions on the proposed amendments to the Competition Act by Genesis Analytics

James Hodge

Director: Competition and Regulatory Economics