Unlawful competition - Insights into The Law in South Africa I am, however, in agreement with Page J in Motion Transfer & Precision Roll Grinding CC v Carsten (supra) at 176h that the approach suggested by Van Heerden & Neethling Unlawful Competition at 237–238 is to be preferred. The issue of unlawfulness relates to  the employer’s confidential information or documents and use of them to compete with the former employer. The protectable information involved in this case had been developed over decades through trial-and-error, both by the American who had licensed his IP, and through refinements made in South Africa. Such judgment involves a weighing up of the conflicting interests of the employer and ex-employee employing the criterion of reasonableness or the boni mores in the light of all the relevant circumstances of the case. Applying competition law to sport will promote fairness, professionalism, efficient resource allocation and economic development. The service providers, as has been shown above, are independent contractors whose services are available to every other photographic stills production house. Want the latest legal news and views in your box? Some of the key amendments introduced in the Amendment Act include the following: This has to be reconciled with the right of an ex … The information that the applicant seeks to protect complies with the first and third of the above requirements, but none of it is within the context of the circumstances of this case secret or confidential. The Commission has now referred its first COVID-19 excessive pricing case to the Tribunal. The Competition Act stipulates that penalties of up to 10% of the annual turnovers in, and exports from, South Africa in the preceding financial year can be imposed on the parties to a merger for failing to give notice of the merger or implementing without approval. Price discrimination regulations are designed to protect smaller businesses from large or dominant firms which have the power to impose prices and deals which favour them. [3]  Interdict – Final interdict – General rule – An application for final relief is generally decided on the respondent’s version. II. Competition Law and Policy in South Africa South Africa aspires to a modern competition policy regime to support the fundamental restructuration of government institutions.This report by the OECD Secretariat which provides an overview of competition law and policy in South Africa was the basis of an in-depth peer review at the 2003 OECD Global Forum on Competition. The free flow of information about participants in the industry is apparent from Annexure “E”, and according to the first respondent, the information is also available on the internet. On 17 June 2015, the Competition Appeal Court of South Africa (CAC) overturned the Competition Tribunal’s decision which found Sasol Chemical Industries Limited (Sasol) guilty of excessive pricing. Home » Competition & Antitrust Law » Fight as a soldier, not a guerrilla – Unlawful competition. 25 Mar 2013. On 13 February 2019, the President of South Africa signed the Competition Amendment Act, 2018 (the Amendment Act) into law. The fees and prices in the industry are: The applicant also claims protection of matters relating to its organisation and general method of business, what Morrow calls the applicant’s modus operandi. The authority, he said, has handled cases concerning mergers, but also increasingly focused on investigating conduct, especially cartels and abuses of dominance. South African Competition Enforcement: a Juxtaposition. not public knowledge; and. Motsoeneng Bill Attorneys Incorporated (“MBA Incorporated”) is a proud 100% Black owned boutique law firm based in Sandton. At common law the term "unfair competition" was a term of art and served primarily to supplement the law of trademarks.6 In its modern 5 C. E. Hooper, Inc., New York, N.Y., TV HOOPEATaINGS; A. C. Nielson Co., Chicago, Ill., NiE soN RADIo-TELEvisIOw INDEX. The South African Competition Act does, however, define an “excessive price” as one which “ bears no reasonable relation to the economic value thereof ”. That the economy must be open to greater ownership by a greater number of South Africans. The confidential information and secrets related to a process of lining (with plastic) steel pipes that are used in the mining industry, with a view to preventing corrosion. The CAK, therefore, is one of the most promising competition agencies in Africa and its responses towards COVID-19 are an important benchmark for young emerging competition agencies in the region. As the first respondent says, what she has gained from being employed by the applicant are generic organisational skills even though they have been honed within the environment of the photographic stills production industry. in the competition law regimes across Africa. But the competition must remain within lawful bounds. The Competition Act of 1998 fundamentally reformed the country’s competition legislation, substantially strengthening the powers of the competition … The matter which the applicant seeks to protect is not confidential or secret; in other words, the applicant has not passed the first hurdle of the test enunciated by Van Heerden & Neethling Unlawful Competition at 237–238. The matters relating to the applicant’s organisation and general method of business do not amount to such trade secrets or confidential information as the applicant is entitled to protect by a restraint of trade. The first respondent does not violate any obligation towards the applicant by using the general knowledge she has acquired of its organisation and methods (see Recycling Industries (Pty) Ltd v Mohammed & another  1981 (3) SA 250 (SE) at 256E, 259E–F)”. What exactly is unlawful competition? Cartel conduct was criminalised from May 1, 2016. So, the recent South African Court of Appeal (“SCA”) judgment in the case of Pexmart CC v H. Mocke Construction (Pty) Ltd is important. Unlawful competition – Trade secrets – A distinction must be drawn between the position of a person still in the employ of the proprietor of the information and one whose employment had terminated – Where the employee is still employed the revelation of trade secrets to a rival during that period will ordinarily amount not only to unlawful competition but will also constitute a breach of an express or tacit term of the contractual relationship between the parties – The position of the employee after his employment has ceased is complicated by the fact that the proposition that it is unlawful for him to take his master’s confidential information or documents and use them to compete with his master has to be reconciled with his right to be entitled to apply the skills and specialised knowledge of a particular trade or industry which he has acquired in the course of his employment elsewhere after the termination of that employment –The Court must in each case pass a value judgment as to whether the use of the information by the ex-employee is justified despite its confidential nature – Such judgment should involve a careful weighing up of the conflicting interests of the employer and ex-employee utilising the criterion of reasonableness or the boni mores in the light of all the relevant circumstances of the case. [1]  Civil procedure – Application – Authority to bring – Deficiency in authority can be cured by ratification having retrospective operation. Applying the law to the facts, Judge Navsa made a number of findings. The process used by Pexmart was similar to the process developed by Mocke Construction, with the differences being immaterial. Registered rights not only have a strong deterrent value, but they are also easier to enforce than common law rights. The CAC’s judgment is thorough and the factual, legal, accounting and economic issues covered are complicated. The first respondent says that trade discounts are negotiated on a continuous basis, and that there is nothing secret about discounts. A value judgment is required in each case. Judge Navsa, who handed down the court’s judgment, went through the basics of unlawful competition. to be followed where a South African Court is called upon to deal with conduct which does not fall under one of the clearly recognised, existing categories of unlawful competition, viz that regard must be had to the boni mores criterion and the general sense of justice of the community in order to judge the fairness and honesty of the conduct complained of (see Schultz v Butt…and that, ‘while fairness and honesty are relevant criteria in deciding whether competition is unfair, … The judge concluded that there had been unlawful competition. The obvious starting point was the famous case of Schultz v Butt, where the court said this: “As a general rule, every person is entitled freely to carry on his trade or business in competition with his rivals. 13. The issue here was whether Pexmart had unlawfully used confidential information and trade secrets belonging to Mocke Construction. Unlawful competition – Trade secrets – Whether the information in casu could qualify as a trade secret and therefore as an independent legal object – In order to do so it had to comply with three requirements: “The position of employees after their employment has ceased is complicated by the fact that the proposition that it is unlawful for them to take the employer’s confidential information or documents and use them to compete with the former employer has to be reconciled with the right to be entitled to apply the skills and specialised knowledge of a particular trade or industry which  has been acquired in the course of employment elsewhere after the termination of that employment”. substituted by s. 22 of Act No. AAT has previously reported on the South African “ Consumer and Customer Protection and National Disaster Management Regulations and Directions ” (Pricing Regulations) which came into … As did the fact that Pexmart had at one stage unsuccessfully sought a licence from Mocke Construction. price of citrus in the United States.2° South African citrus exporters argued that this conduct had an impact within South Africa. The South African Competition Commission has warned that dominant firms found to be engaged in excessive pricing will be prosecuted and the Competition Tribunal has confirmed the procedure in terms of which it will deal with these cases. same proceedings pending in other proceedings). “Fees and prices are a matter of negotiation between the production house and the client, and the production house and the service provider. In this context he referred to the decision of Harchris Heat Treatment (Pty) Ltd v Iscor, where the court described the confidential information in issue as “intellectual property”, meaning that the owner has the “right to exploit it.”. Earlier this month, the South African Competition Tribunal found a firm guilty of abusing its dominance. The right to protection from unlawful competition requires a wrongful interference with another’s rights as a trader. 2019 GOLEGAL ALL RIGHTS RESERVED | WEBSITE POWERED BY, Fight as a soldier, not a guerrilla – Unlawful competition, Pexmart CC v H. Mocke Construction (Pty) Ltd, Harchris Heat Treatment (Pty) Ltd v Iscor, Close but no cigar – The importance of restraint of trade clauses. In Sub-Saharan Africa, there are other similarities between the provisions of the legislation in Botswana, Kenya, Namibia, South Africa and Swaziland as far as prohibited practices are concerned – particularly with regard to the abuse of a dominant position. However, as in most developed economies, competition is controlled. South Africa's tightening up of its competition law enables it to punish collusive conduct by firms, but there are major obstacles to implementing the changes. Thirdly, the information must, likewise objectively viewed, be of economic (business) value to the plaintiff.”. When Pexmart started supplying the same product to the gold mining company that Mocke Construction was doing business with (at a cheaper price) Mocke Construction sued, claiming unlawful competition. The illegal conduct comprised excessive pricing of face masks for a period of just over one month. There is no secrecy or confidentiality about who they are and the nature of the services they provide. The Competition Amendment Act (the “Amendment Act”) was signed into law by President Cyril Ramaphosa on 13 February 2019. This study guide uses multiple-choice and short-answer questions to test your students' knowledge of trademark and unfair competition law doctrine. Unlawful competition – Goodwill – Every employee occupied in the field of customer relations must become acquainted with and build up a relationship with his employer’s customers – It would be totally unrealistic to expect an employee after termination of his employment to shun all such customers. The information quite clearly had economic value. The fact that it had failed to call Henn as a witness counted against it. On the approach suggested by the learned authors, it must first be determined, with reference to the requirements of confidentiality and economic value, whether the information concerned actually constitutes a trade secret. Steyn said competition law in South Africa was very developed and the country has had a very active Competition Commission since 1999. Comphelp.co.za. In order for information to qualify as a trade secret, the judge said that three requirements must be met. 34180), (1) Confidential information includes any information containing or consisting of—, (b) financial, commercial, scientific or technical information, if disclosure of the information is likely to cause harm to the commercial or financial interests of a person; or, (c) information supplied in confidence by a person, if the disclosure of the information could reasonably be expected to—, (i) put that person at a disadvantage in contractual or other negotiations; or. upon the tort of "unfair competition" as known to the common law. Townsend Productions (Pty) Ltd v Leech [2001] 2 All SA 255 (C) per Erasmus AJ. 39 of 2000.] the information must, objectively viewed, be of economic (business) value to the former employer. Commercial, Corporate, IP, Administrative, Competition & Contract Law Firm in South Africa +27 11 463 9401. (ii) prejudice that person in commercial competition. The trader has not a free lance. The Court has also restated and applied the requirements for a defence of lis pendens (i.e. Motion Transfer & Precision Roll Grinding CC v Carsten [1998] 4 All SA 168; [1998] JOL 3045 (N) per N Page J. It establishes the Competition Commission, a regulatory body tasked with monitoring South Africa’s economic markets, investigating prohibited anti competitive conduct and approving mergers between firms. At one stage, Mocke Construction employed an individual by the name of Henn. These are as follows: the information must be capable of application in trade or industry; the information must be secret or confidential; and the information must be of economic (business) value to the plaintiff. The production houses are their clients and they seek the business of the production houses, for it is through the production houses that their products and services are marketed to the overseas clients of the production houses”. [4]  Restraint of trade agreement – Enforcement – Need for ratification of contract where present applicant was not the same entity as that in whose favour the restraint was signed. The Amendment Act introduces extensive changes to the South African Competition Law landscape. Posted by GilesFiles | Aug 11, 2015 | Competition, Consumer protection, Insights, Protectable business interests, Public policy, Restraints and restrictions, Topics | 1. The information is widely known in the industry. South African competition law, a number of provisions are unique to the COMESA competition regulations and will require careful consideration and assessment. COMPETITION LAW& : Comphelp will assist South African small business with competition, monopolistic, price discrimination or antitrust legal issues. A number of the amendments were brought into effect in the last year, including the amendments to merger notifications, as well as the inclusion of buyer power and price discriminations provisions, which are set out further on in this chapter. The man behind Mocke Construction had worked closely with an American in developing this lining process, and the American had licensed his own IP to the company. [2]  Contract – Restraint of trade agreement – Enforceability – Restraint must protect some proprietary interest of the person seeking to enforce it – Cannot be aimed at eliminating competition – Reasonableness of restraint assessed against public policy. Each multiple-choice question is accompanied by a detailed answer that indicates which of four options is the best answer and explains why that option is better than the other three options. South Africa: The Competition Act: Buyer Power. [Para. The Constitutional Court has confirmed that the Labour Court has jurisdiction to adjudicate an automatically unfair dismissal claim even if the dispute referred to conciliation was for an ‘ordinary’ unfair dismissal. Henn subsequently went on to join Pexmart, a rival business. This has to be reconciled with the right of an ex-employee to apply the skills and specialised knowledge of a particular trade or industry acquired in the course of employment. (Van Heerden & Neethling Unlawful Competition at 225; see also Alum Phos (Pty) Ltd v Spatz & another [1997] 1 All SA 616 (W) at 623g–624a; Motion Transfer & Precision Roll Grinding CC v Carsten and another [1998] 4 All SA 168 (N) at 175d–j; Aranda Textile Mills (Pty) Ltd v Hurn & another (supra) at 190i–191d). The Amendment Act appears to render the prosecution of abuse cases easier for the Commission. GoLegal is a leading industry news and information portal for the South African legal sector, catering to attorneys, corporate counsel, legal scholars, policy makers and other corporate and legal interest groups. If we look at cartel Unfair competition includes illegal state aid for foreign companies, protectionism or discrimination in contract award procedures. Both are also impacted by a number of statutes which, aside from the Competition Act 89 of 1998, directly or tangentially regulate business practice and competition law. South Africa has a developed and regulated competition regime based on best international practice. Companies should not overlook unlawful competition, given that it potentially has a very broad application, but they should certainly not see it as a substitute for IP registrations, such as trade marks or patents. Though the skills acquired by the first respondent through her employment by the applicant, might serve to equip her as a possible competitor, they do not constitute the kind of trade secrets or confidential information which can reasonably be protected by a covenant in restraint of trade. The overarching theme of the Amendment Act is the enhancement of the degree of public interest considerations in competition law matters. “In order to qualify as confidential information, the information concerned must comply with three requirements: “First of all, and this is really self-evident, the information must not only relate to, but also be capable of application in, trade or industry. and unjust restrictions on full and free participation in the economy by all South Africans. Unlawful competition is one of the fastest- developing areas of South African law, partly Secondly, the information must be secret or confidential. GNR.293 of 1 April 2011: Regulations (Government Gazette No. The issue of unlawfulness relates to the employer’s confidential information or documents and use of them to compete with the former employer. 2, These cases point to very important challenges to competition law enforcement in SACU. In South Africa, the Competition Amendment Bill was signed into law in early 2019 and since then, certain provisions have come into effect, with others are still pending. he law of unlawful competition (or unfair competition, as it is sometimes called) seeks to ensure that competition in business remains within fair and reasonable bounds and that no trader benefits at the expense of his rivals through the use of improper business methods. If it is carried on unlawfully, in the sense that it involves a wrongful interference with another’s right as a trader, that constitutes an injuria for which the Aquilian action lies if it has directly resulted in loss.”, The judge looked at another famous case, Dun and Bradstreet (Pty) Ltd v SA Merchants Combined Credit Bureau (Cap) Pty Ltd, where these dramatic words were said: “Though trade warfare may be waged ruthlessly to the bitter end, there are certain rules of combat which must be observed. To date, only South Africa has a policy, law, and a competition authority to enforce the law. Unfair Competition and Antitrust Help for South African Companies. What are trade secrets and how do we protect them? The Competition Act was passed in 1998 to promote and maintain competition. Judge Navsa made the point that there is no closed list of actions constituting unlawful competition, but there are some obvious prohibitions, for example: The judge said that this case was primarily involved with the misuse of confidential information and trade secrets, incorporating the unfair use of a competitor’s fruits and labour. the information must relate to and be capable of being applied in a trade or industry; the information must be secret or confidential, or in other words only available and known to a restricted number of people i.e.
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