Can silent participation constitute a contravention of the Competition Act?

competition actIn South Africa, agreements, concerted practices, or decisions by an association of competitors, are prohibited if it has the effect of substantially lessening or preventing competition in a market.

In terms of section 4(1)(b)(i) of the Competition Act No 89 of 1998 (“the Act”):

“An agreement between, or concerted practice by, firms, or a decision by an association of firms, is prohibited if it is between parties in a horizontal relationship and if – (a) it has the effect of substantially preventing, or lessening, competition in a market, unless a party to the agreement, concerted practice, or decision can prove that any technological, efficiency or other pro-competitive gain resulting from it outweighs that effect”.

This prohibition can be overcome by a showing that the pro-competitive gains outweigh the anti-competitive effect of the agreements. However, in practice, the agreements that threaten the most serious anti-competitive effects like price fixing, market division, and collusive tendering, are prohibited per se, without the Act requiring a show of actual harmful effect.

The question thus arises, if you, as a competitor, do not actively participate in an agreement or the making of a decision, can it still be considered a contravention of the Act as aforesaid?

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