The objectives sought by a particular piece of legislation are usually set out in the preamble. Yet, what happens when a law has multiple objectives that may seemingly conflict with one another? We discuss this matter in relation to the South African Competition Act of 1998.
The preamble of the Competition Act is long and quite expository. For our purposes, we will focus on the objective of creating free markets where consumers can freely choose and the objective of restraining certain anti-competitive trade practices.
Trade practices
In a case brought against SAA by Comair, the former was said to have abused its dominance in the domestic market through its trade practice of offering special perks to travel agents who freely chose their airline. This practice of inducing travel agents away from other airlines by offering perks was found by the Competition Tribunal to be an abuse of dominance and thus anti-competitive.
A trade practice that can be restricted therefore, is not necessarily a criminal act, but rather is a nonviolent or non-forceful act or an act aiming to ensure business success.
SAA was found to be unjustly dominant or to have abused its dominance by the Commission Tribunal since it was freely chosen by consumers, namely travel agents, in a market where they could have otherwise chosen Comair or any other company. The objective of markets that enable free choice seems to have clashed with the objective of requiring the restriction of anti-competitive trade practices.
Which objective from the preamble means more? Why should an objective mean more if it comprises substantive provisions? As stated, the objectives, goals or ends sought by laws are important. As a rule of good jurisprudence, a law should stick to what it was created for: the problems it was drafted to solve or help adjudicate.
Therefore, in interpreting the provisions of the Competition Act, it becomes important to contextualise them within certain ends which were envisaged by the legislature when the law was passed, those ‘ends’ being stated in the preamble or long title.
It’s not unusual to see legislation which was drafted for one reason being used for a variety of other reasons. Therefore, one must look for help at the objectives of the law in its long title or preamble, so as to clarify what actual problems the law seeks to solve and what it aims to achieve.
With our problem of conflicting values, sound jurisprudence implores us to interpret law in a manner that would not give rise to it contradicting itself. [Therefore, I would posit that there ought to be a singular overriding objective.
The overriding end sought by competition law domestically and internationally is open markets where consumer choice is the dominating factor. The preamble of the Competition Act, which mentions market concentration under the previous administrations in South Africa, states that the purpose of the legislation is to facilitate consumer choice.
State-enforced concentration in markets inhibits or distorts choice. The legislation seeks to widen the free choice of South African consumers. That is the context under which the restriction of so called anti-competitive trade practices must be understood. Widening consumer choice as a broad principle promotes efficient and effective markets as well as effective participation in international markets. All the principles in the preamble of the Competition Act ought to be understood as benefiting consumers.
An overriding objective would be to present a singular standard against which businesses can measure the various actions that may concern competition authorities. If the general objective of promoting consumer choice is observed in everything from mergers to trade practices, then the certainty necessary in the rule of law would be present.
This is not a magic bullet to solve the myriad of problems in competition law. It is an introduction to a case for a more sensible and sound interpretation of competition legislation. The Rule of Law needs certainty and is opposed to arbitrariness. Therefore, when objectives of the same legislation can be interpreted in diametrically opposite ways, there is a problem.
The widening of consumer choice and the consequence of respecting those choices as a unifying objective of the legislation ought to be encouraged, if only to enrich our competition law jurisprudence.
The views expressed in the article are the author’s and not necessarily those of the Daily Friend or the IRR.