COMPETITION COMMISSION: INPUT SOUGHT ON DRAFT PRICE-COST MARGIN CALCULATION GUIDELINES

COMPETITION COMMISSION: INPUT SOUGHT ON DRAFT PRICE-COST MARGIN CALCULATION GUIDELINES

• 08 January 2025
• Trade, Industry & Competition
• SA Legal Academy

The Competition Commission has finally published price-cost margin calculation draft guidelines on which input was sought in a notice gazetted on 19 December 2024. However, as far as can be ascertained the deadline for input remains 30 January 2025.

According to a preface to the draft guidelines:

• sub-section 8(1)(a) of the 1998 Competition Act, as amended, ‘prohibits a dominant firm from charging excessive prices to the detriment of consumers or customers’
• in assessing whether a price is excessive, the Commission is required under sub section 8(3)(a) ‘to determine whether that price is higher than a competitive price and whether (any) such difference is reasonable by taking into account all relevant factors’, and
• these factors ‘may include the respondent’s price-cost margin, internal rate of return, return on capital invested or profit history’.

Against that backdrop, the purpose of the draft guidelines is to outline ‘how the Commission intends to undertake … calculations for the price-cost test’. Since a price-cost test ‘may not always be relevant’, ‘the Commission will apply its discretion’ on whether or not to use it.

• Government Gazette notice
• draft guidelines

Published by SA Legal Academy Policy Watch

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