COMPETITION ACT: PRICE-COST MARGIN CALCULATION GUIDELINES PUBLISHED

COMPETITION ACT: PRICE-COST MARGIN CALCULATION GUIDELINES PUBLISHED

• 28 March 2025
• Trade, Industry & Competition
• SA Legal Academy

The Competition Commission has published final guidelines on its approach when undertaking calculations for the price-cost test ‘where it is used’. According to the document’s preface, this is noting that:

• since ‘the price-cost test may not always be relevant’, it is used at the Commission’s discretion
• the guidelines focus on price-cost computation and not on:
  • ‘the reasonableness of any excess’ or
  • other factors possibly impacting on the reasonableness assessment
• section 8(1)(a) of the 1998 Act prohibits a dominant firm from charging excessive prices to the detriment of consumers or customers, and that
• when a competitive price is exceeded, in determining its reasonableness the Commission is required to consider all relevant factors, which may include:
  • the respondent’s price-cost margin
  • the internal rate of return
  • return on capital invested, and
  • profit history.

As SA Legal Academy reported at the time, the guidelines were published in draft form on 8 January 2025 for public comment – nearly three weeks after the notice announcing their release was gazetted.

• guidelines
• Government Gazette notice announcing their publication

Published by SA Legal Academy Policy Watch

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