Myths About Competition Law

MYTH: Competition policy law will restrict business

FACT: Competition law regulates the negative conduct of businesses operating in a market to allow for optimum levels of competition. In fact,: Competition policy is about applying rules to make sure businesses and companies compete fairly with each other. This encourages enterprise and efficiency, creates a wider choice for consumers and helps reduce prices and improve quality.

MYTH: The competition commission will be a price regulator

FACT: It will not regulate prices. In a free market, suppliers can set their own prices but they should do so independently. What is expected to be prohibited under the law is the attempt by competitors to collectively fix prices, thereby restricting competition in the market.

MYTH: The competition commission will only investigate big business

FACT: The competition commission is allowed to investigate if any entity (person, business, businesses) found to have infringed the law.

MYTH: Being a dominant player in the market is bad

FACT: Being a dominant player in a market is in itself not anti-competitive. However, when a dominant player negatively uses its dominant position to unduly eliminate or restrict competition, this ultimately hurts consumers and businesses and is considered abuse of dominance. 

MYTH: Mergers will not be allowed

FACT: Not all mergers give rise to competition concerns. Many mergers can preserve or even enhance the existing level of rivalry. A merger is anti-competitive only when it leads to a substantial lessening of competition

MYTH: If several businesses have similar high prices or increases in prices, then that means that price fixing has taken place

FACT: similar (changes in) prices does not always indicate price fixing. High Prices, or price changes, among businesses may be caused by other natural market forces in a highly competitive market.

MYTH: Businesses may share pricing plans and strategies with the intention of reducing price volatility therefore leading to a more stable market

FACT: Commercially sensitive information (pricing, promotions, discounts, etc.) should never be shared or exchanged with competitors. Doing so increases the risk of infringing on competition law.

MYTH: Agreeing with a competitor to take turns winning a tender bid /contract is okay.  

FACT: when competitors agree with one another on who should win a tender, it is considered bid rigging and will be considered unlawful once competition law is enacted. This may also occur when competitors agree amongst each other to refrain from bidding, withdraw their bids, or submit 'false' bids with the intention of pre-selecting the winning bidder.