- Competition Law
All is often fair in war and business. There are nevertheless some legal rules that may curb the excesses that can occur in the competitive struggle. Competition between a company and its former directors or employees regularly ends up in court. A former director or employee of a company is, for example, not permitted to rely on confidential information about business opportunities of the company if that information came to his knowledge when he was still associated with that company. He may not start his own business venture using that information as a ‘springboard’. Such relationships are covered by the law of competition. ‘Restraint of trade’ clauses are also commonplace in employment and shareholders agreements and limit the former shareholder’s or employee’s economic freedom to engage in a similar venture for a specified period of time and within a given geographical area.
There is also a further set of rules that is referred to as ‘competition law’. But this area of competition law relates to the State’s interest in regulating the economy by enforcing laws that govern conduct that is viewed as restricting competition and as being harmful to the economy and economic welfare in general. With certain exceptions firms are not permitted to agree on prices that they will charge consumers, or to demarcate areas where they will avoid competing with one another. Firms may also not collude on tenders, for example the one will tender on one contract and the other on another. Markets may be characterised by conditions varying from highly or perfectly competitive to monopolistic. The competitive or monopolistic conditions of markets may develop over long periods and become structural to the economy. ‘Competitive’ in an economic sense, refers to conditions where there are many buyers and many sellers and no single market party has power over any other market party. ‘Monopolistic conditions’ are present in the economy when there are only one or a few suppliers (or consumers) and such suppliers have a considerable degree of freedom to influence prices. Larger firms may grow through being effective competitors, but may also come into existence when two or more firms merge. The competition law of South Africa is aimed at two particular phenomena, namely restrictive practices and the regulation of mergers.
There is also a further set of rules that is referred to as ‘competition law’. But this area of competition law relates to the State’s interest in regulating the economy by enforcing laws that govern conduct that is viewed as restricting competition and as being harmful to the economy and economic welfare in general. With certain exceptions firms are not permitted to agree on prices that they will charge consumers, or to demarcate areas where they will avoid competing with one another. Firms may also not collude on tenders, for example the one will tender on one contract and the other on another. Markets may be characterised by conditions varying from highly or perfectly competitive to monopolistic. The competitive or monopolistic conditions of markets may develop over long periods and become structural to the economy. ‘Competitive’ in an economic sense, refers to conditions where there are many buyers and many sellers and no single market party has power over any other market party. ‘Monopolistic conditions’ are present in the economy when there are only one or a few suppliers (or consumers) and such suppliers have a considerable degree of freedom to influence prices. Larger firms may grow through being effective competitors, but may also come into existence when two or more firms merge. The competition law of South Africa is aimed at two particular phenomena, namely restrictive practices and the regulation of mergers.