Restrictive horizontal practices

Restrictive horizontal practices

1. Intro: s 4(1)

   • Horizontal r/ship: r/ship between competitors . Firms are not competitors just because they operate in the same market. MUST BE COMPETITORS FOR s 4 TO APPLY
   • Restrictive horizontal practice: agreement/concerted practice or decision by an association of firms is prohibited if it is b/w parties in a horizontal r/ship
     • Agreement: American Natural Soda Ash Corp- mutually exclusive with 'concerted practice'. can be contract/arrangement/understanding- legally enforceable or not. Not all are enforceable in law- goes further- some anti-competitive agreements will rarely be put in writing. NB! Must be consensus between parties on an identifiable anti-competitive course of action
     • Concerted practice: not an agreement. Companies where conduct appears objectively to be the result of co-operation. Achieved through indirect/direct contact. Connotes some or other collusive action between firms. Interp is problematic. Apples example. Must be evidence of contact (direct/indirect)
     • Decision by association of firms: Antecedent obligation to act anti-competitively that occurs NOT when individual forms decide amongst themselves and for themselves to do so but when they are already formed together in some associations which imposes its decisions on its members. Oral statements/recommendations/rules to obey and impact competition

2. s 4(1)(a)

   • Agreement is prohibited if it has the effect of substantially lessening or preventing competition- subject to rule of reason justification- tech/efficiency/pro-competitive gain
   • Considered as 'catch all' picks up conduct that falls outside s 4(1)(b)
   • NB feature- allows anti-competitive behaviour provided that it falls outside s 4(1)(b) and has tech/efficency etc gain
   • TEST: Is there agreement/concerted practice/decision by association of firms. If YES- does it fall w/in s 4(1)(b)/ If NO- does it have effect of substantially preventing or lessening comp in market? If YES- can it be justified? If YES- conduct permissible. If NO- conduct prohibited

3. S 4(1)(b)

   • Per se prohibition- cannot be validated by justification. Once est that conduct falls within ambit- defendant is automatically liable
   • Price fixing: Absolute prohibition. Doesnt matter whether conduct is direct/indirect/open/secret. Degree of conduct irrelevant. Effect of conduct irrelevant. Goal is to force consumers to pay more for good without effort of adding value. Structuring market so that consumers pay more than they otherwise would
   • Allocation of markets: Topco example. Absolute prohibition
   • Collusive tendering: involves competitors discussing and deciding which of them will submit the lowest bid and thus be awarded the tender

4. Penalties

   • Imposition of admin fine by authorities OR competition authorities may demand that arrangement should be unravelled
     • Authorities
       • Competition commission: market transparency, public awareness, compliance, investigative functions
       • Competition tribunal: Assessing and adjudicating mergers, appeals from comp comm, granting interim relief
       • Competition appeal court: consideration of merits of final/interim decisions, appeals/reviews from tribunal

5. Corporate Leniency Policy

   • Relates only to matters ito s 4(1)(b). Allows Comp Comm to be lenient to member of cartel which blows whistle on caretel's existence and operations. Applies only to firms which are themselves party to anti-competitive conduct. Diff from whistleblowing by INDIVIDUALS
   • Why CLP? 1. Makes evidence gathering a lot easier 2. CLP acts as an incentive for one member to break ranks bringing down whole cartel 3. Provides escape route who unwittingly joins and then realises mistakes
   • Conditions for immunity: 1. You have to get there first 2. Must provide full and honest disclosure 3. Do not alert other cartel members 4. Stop cartel conduct immediately 5. Applies ONLY to civil aspect- not crim
   • CLP Procedure 1. Contact comp Comm to put down a marker 2. Apply for immunity in writing 3. Provide full disclosure of info 4. Comp Comm investigates 5. Cartel members prosecuted 6. Definitive immunity confirmed after this