A Competitor’s Guide to COVID-19

Individuals, corporations and the economy have all fallen victim to the devastating impact of COVID-19 (“the coronavirus”). However, the recent regulations published by the Minister of Trade, Industry and Competition, Minister Patel, intends to bring some relief to the economy in its bid to fight the pandemic.

The Competition Act 89 of 1998 (“the Act”), allows the Minister to exempt categories of agreements or practices from the application of chapter 2 (prohibited practices) of the Act, in order to give effect to the purpose of the Act. The Act echoes the objectives of the Constitution in that it similarly has as one of its purposes “to promote employment and advance the social and economic welfare of South Africans”.

The series of regulations published during the State of Disaster allows certain agreements between competitors (section 4), as well as between an entity, its suppliers and its customers (section 5), which typically is considered to be a contravention of the Act. The leeway afforded to competitors, suppliers and customers are all aimed at alleviating the socio-economic harms presented by the coronavirus.

We summarise the recent regulations published during the State of Disaster.  The regulations can largely be divided into two categories, being exemptive regulations and exploitative regulations. For a full summary of each regulation, click on the “read more” link below.

Jac Marais
Partner | Commercial Attorney
Mia de Jager
Associate | Litigation Attorney

Exemptive regulations

Regulation

The block exemption for the Healthcare Sector – 19 March 2020 and 8 April 2020.

Purpose

To promote access to healthcare, prevent the exploitation of patients, enable the sharing of healthcare facilities, manage capacity and reduce prices.

Practical Effect

Various role players in the healthcare sector, as well as the Department of Health are allowed to coordinate regarding the allocation of patients; the use of facilities, procurement of consumables and pharmaceuticals; the availability of medical supplies etc.

With the authorisation of the Minister of Health, the exemption also allows for agreements and practices intended to reduce the costs, diagnosis, tests, treatment and other preventative measures (including vaccines).

The exemption has been expanded to extend to manufacturers and suppliers of medical and hygiene supplies to allow for communications in respect of the availability of medical and hygiene supplies; and coordinating the procurement and distribution of medical and hygiene supplies.

A full list of exempted practices are available here.

Regulation

The block Exemption for the Banking Sector – 23 March 2020

Purpose

To enable the banking sector to minimise the negative impact on the ability of customers to manage their finances during the national disaster, and to be able to continue normal operations beyond the national disaster; and

to enable the banking sector to manage the banking infrastructure, including the payment infrastructure, ATMs and branches.

Practical Effect

This regulation has the effect of exempting, from scrutiny by the competition authorities, the following:

  • Agreements or practices in the banking sector with the sole purpose of ensuring essential payment systems continue to operate during the national disaster; and
  • Agreements or practices with the sole purpose of ensuring the management of debtors and extension of credit continue during the national disaster.

A full list of exempted practices are available here.

Regulation

The block Exemption for the Retail Property Sector – 24 March 2020

Purpose

The regulation allows agreements or practices amongst and between designated retail tenants and retail property landlords, with the sole purpose of ensuring the survival of tenants of retail properties during the national disaster.

The agreements and practices potentially include engagements regarding payment holidays, rental discounts, limitation on the eviction of tenants, the suspension or adjustment to certain provisions of lease agreements etc.

A full list of exempted practices are available here.

Practical Effect

This regulation has the effect of exempting, from scrutiny by the competition authorities, the following:

  • Agreements or practices in the banking sector with the sole purpose of ensuring essential payment systems continue to operate during the national disaster; and
  • Agreements or practices with the sole purpose of ensuring the management of debtors and extension of credit continue during the national disaster.

A full list of exempted practices are available here.

Regulation

The block exemption for the Hotel Industry – 27 March 2020

Purpose

To enable the hotel industry to collectively engage with the Department of Health and the Department of Tourism in respect of identifying and providing appropriate facilities for persons placed under quarantine, as determined by the Department of Health.

Practical Effect

This regulation allows agreements or practices in the hotel industry to identify and provide accommodation for persons placed under quarantine; to communicate regarding capacities and the utilisation of facilities for accommodation.

At the request of the department of Health and Tourism, and subject to its oversight; agreements in respect of the reduction of the cost of accommodation of persons placed under quarantine, may be permitted.

A full list of exempted practices are available here.

Exploitative regulations

Regulation

Consumer and customer protection regulations and directions – 19 March 2020

Purpose

To protect consumers and customers from unconscionable, unfair, unreasonable, unjust or improper commercial practices during the national disaster.

Practical Effect

The regulation prohibits firms from charging excessive prices to consumers in respect of goods and services that are deemed as protected goods or services in the regulations themselves.

The regulation further sets out when a price is considered to be excessive.

The regulations have empowered the Competition Commission to take policy decisions to prioritise such complaints in order to ensure that firms exploiting consumers are quickly prosecuted and penalised.

The regulation pertaining to excessive pricing can be accessed here .

Regulation

The block Exemption for the Banking Sector – 23 March 2020

Purpose

To enable the banking sector to minimise the negative impact on the ability of customers to manage their finances during the national disaster, and to be able to continue normal operations beyond the national disaster; and

to enable the banking sector to manage the banking infrastructure, including the payment infrastructure, ATMs and branches.

Practical Effect

This regulation has the effect of exempting, from scrutiny by the competition authorities, the following:

  • Agreements or practices in the banking sector with the sole purpose of ensuring essential payment systems continue to operate during the national disaster; and
  • Agreements or practices with the sole purpose of ensuring the management of debtors and extension of credit continue during the national disaster.

A full list of exempted practices are available here.

Regulation

COVID-19 Excessive Pricing Complaints Referrals – 6 April 2020

Purpose

To provide for rules regulating complaint referrals heard in the Tribunal for alleged contraventions of the Competition Act relating to excessive pricing in respect of protected goods.

Practical Effect

Provides for an expedited process for the referral and prosecution of complaints for the contravention of the consumer and customer protection regulations.

The regulation pertaining to the Competition Tribunal Rules for COVID-19 Excessive Pricing Complaints can be accessed here.

We recommend that industry players adopt a pro-active approach in any engagements with competitors, suppliers and customers, by seeking legal advice before doing so.

Our Competition Team is available to assist you in navigating the regulations, and invite you to contact us (jac.marais@adams.africa) if you have any questions.

Furthermore, a comprehensive analysis of the regulations can be accessed here

Co-author: Kameel Pancham

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