Enforcing the Competition Law in Namibia A Toolkit - cuts ccier

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4. RESTRICTIVE BUSINESSPRACTICESRestrictive business practices (RBPs), or anticompetitive practices, put simply,are actions by enterprises, whether in the private or public sector, designed tolimit access to markets or restrain competition in the market in order to maintainor increase their relative market position and profits without necessarilyproviding goods and services at a lower cost or of higher quality.According to the Competition Law 2003 of Namibia, there are two types ofRBPs:• restrictive agreements, practices and decisions (called Part I prohibition,because the prohibition is imposed by Part I of Chapter 3); and• abuse of dominant position (Part II prohibition).Various types of RBPs will be explained in a nutshell. Legal provisions of theNamibian Competition Act will be clarified along with the relevant legal theoryand quoted real-life cases from Africa or other jurisdiction in the world dealingwith such practices will be provided.4.1 Market PowerA key concept in many competition analyses isthat of ‘Market Power’. Without marketpower, no anticompetitivepractices by firms canachieve theirintended goal.‘Market power’refers to the abilityof an individualfirm or a group offirms to raise andmaintain price above the level which would prevail under competition. 29 Thehighest degree of market power is associated with a monopoly, although allfirms; except for those operating in perfectly competitive markets; possesssome degree of market power.High market share is generally considered as a necessary, though not asufficient, condition to establish market power. 30 Besides, as debate exists onwhat criteria best reflect potential market power; even the measurement ofEnforcing the Competition Law in Namibia: A Toolkit 17www.images.com
RESTRICTIVE BUSINESS PRACTICESmarket share is a controversial issue. For example, market share can bemeasured by current sales, historical sales or even capacity (potential).Some jurisdictions have established de facto or de jure benchmark marketshares above or below which market power is presumed to exist or not exist.Yet, it is not clear that there is an economic justification for pre-determiningthe existence of market power at any given market share. Alternatively,concerns about administrative efficiency sometimes justify a market share‘safe harbour’, below which market power is deemed not to exist.Determining whether a firm or group of firms have market power or not is thestarting point for case analysis with regard to abuse of dominance. (This is atype of RBP, which would be discussed later under Section 4.7). Importantfactors that must be considered in measuring the market power of a firm or agroup of firms, other than market share, include:• number and market shares of competitors;• nature of the relevant product;• countervailing power of other market participants;• intellectual property rights (IPRs);• market characteristics such as regulatory environment, rate of technicalchange, existence of potential or poised competitors; and• barriers to entry.Though being last in the list, barriers to entry usually constitute the mostimportant factor. Dominance does not exist if entry to a market is easy. A firmwith a 90 percent share of the market is not dominant if, as soon as it raise theprice of its goods, other firms would enter the market and sell their goods atmore competitive prices. As a result, a definition of dominance requires ananalysis of whether there are any barriers to entry.Box 2: Four General Cases of MarketsClassified According to Barriers to Entry• High barrier to entry and high exit barrier (Telecommunications,Energy)• High barrier to entry and low exit barrier (Consulting, Education)• Low Barrier to entry and high exit barrier (Hotels, Siderurgy)• Low barrier to entry and low exit barrier (Retail, E-commerce)Markets with high entry barriers have few players and thus high profitmargins. Those markets with low entry barriers have lots of players andthus low profit margins. Moreover, markets with high exit barriers areunstable and not self-regulated, so the profit margins fluctuate very muchalong time, whereas markets with a low exit barrier are stable and selfregulated,so the profit margins do not fluctuate along time.Source: http://en.wikipedia.org/wiki/Barriers_to_entry18 Enforcing the Competition Law in Namibia: A Toolkit
Page 4 and 5: CONTENTSPreface ...................
Page 6 and 7: LIST OF BOXESBox 1: An Overview of
Page 8 and 9: PREFACEI am pleased to write this p
Page 10: y the Korean Fair Trade Commission
Page 13 and 14: RBPs : Restrictive Business Practic
Page 15 and 16: INTRODUCTIONOver time, the Governme
Page 17 and 18: Section 26 of the Act defines abuse
Page 19 and 20: INTRODUCTION1.3 Country BackgroundN
Page 21 and 22: ABOUT THE MARKET ECONOMYsales and p
Page 23 and 24: 3. MARKET AND COMPETITION3.1 Compet
Page 25 and 26: MARKET AND COMPETITIONare able to s
Page 27 and 28: MARKET AND COMPETITION3.3 Market Sh
Page 29: MARKET AND COMPETITIONCompetition p
Page 33 and 34: RESTRICTIVE BUSINESS PRACTICESAccor
Page 35 and 36: RESTRICTIVE BUSINESS PRACTICES4.3 E
Page 37: RESTRICTIVE BUSINESS PRACTICESappli
Page 42 and 43: for fixing prices, will refrain fro
Page 44 and 45: Any agreement, decision and concert
Page 46 and 47: • Agreeing with competitors that
Page 48 and 49: customers might be able to force a
Page 50 and 51: 4.6 Vertical AgreementsVertical ant
Page 52 and 53: Box 12: Hungarian Book Publishers i
Page 54 and 55: RESTRICTIVE BUSINESS PRACTICESfor e
Page 56 and 57: Box 15. Manufacturer vs Manufacture
Page 58 and 59: Box 16: Tie-up Sales of Gas Stoves
Page 60 and 61: • directly or indirectly imposing
Page 62 and 63: Box 18: The Conduct of MTN of Charg
Page 64 and 65: Box 20: Predatory Practices in the
Page 66 and 67: Refusal to deal/supply is not expli
Page 68 and 69: A complaint file must include evide
Page 70 and 71: suppliers he tried said that they h
Page 72 and 73: information relating to the affairs
Page 74 and 75: A leniency policy describes the wri
Page 76 and 77: manufacturers regarding their respo
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6.4 Control of MergersThe control o
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it may, within 30 days of the date
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The initial information filing typi
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Box 27: South African Pharma Merger
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The reasons for this recognition ma
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Box 30: The Graphite Electrodes Car
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Boeing convinced the EC to declare
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In India, for instance, in 1994, Hi
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7.5 Dealing with Cross-border Issue
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In this regard, it is important to
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The following sections will set out
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Box 34: Microsoft’s Abuse of Domi
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through payment of remuneration. Co
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Box 36: Importation and Retailing o
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Table 1: Different Stages of Instit
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power in a fully integrated competi
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investigate managers and employees
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COMPETITION VS INTELLECTUAL PROPERT
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Namibian Consumer’s Association (
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In addition to the above-mentioned,
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staff while gaining practical exper
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To conclude, the Competition Act is
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ENDNOTES1 Available at www.cuts-int
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50 Mehta, Pradeep S., Competition a
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Enforcing the Competition Law in Na
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