Journal of Competition Law and Economics Advance Access published online on March 29, 2008
Journal of Competition Law and Economics, doi:10.1093/joclec/nhn005
ASSESSING EXCESSIVE PRICING: THE CASE OF FLAT STEEL IN SOUTH AFRICA
South Africa's Competition Tribunal recently ruled in favor of the complainant in the first case of excessive pricing to come before it since the 1998 Competition Act established new institutions in 1999. This article examines the standards that should be adopted in assessing excessive pricing in a small developing country such as South Africa, through a review of the complainee, Mittal Steel South Africa's, pricing practices. It is argued that entrenched dominance is central to a finding of excessive pricing, where that position has not been attained through innovation or product development, and that the excessiveness of the pricing ought to be assessed against a range of indicators of pricing under effectively competitive conditions. It is argued that in a country such as South Africa, the conditions for excessive pricing are much more prevalent than in large industrialized economies.
* Chief Economist, Competition Commission of South Africa, and Visiting Professor, University of the Witwatersrand. Email: simonr{at}compcom.co.za. This paper is written in my personal capacity and does not necessarily reflect the views of the Competition Commission. It draws on research undertaken together with Ryan Hawthorne and Reena Das Nair for the case brought by Harmony Gold against Mittal Steel South Africa in the South African Competition Tribunal, in which I was an expert witness for Harmony Gold (prior to joining the Competition Commission). The Tribunal ruled in favor of Harmony Gold (case number 13/CR/Feb04, reasons available at www.comptrib.co.za) and the case is now being appealed to the Competition Appeal Court.