A perspective, competition law and lock-down, South Africa.

P Garayi 010 592 2321
A lot of changes have happened in South Africa since the COVID-19 pandemic was declared to be a national disaster in terms of the Disaster Management Act No. 57 of 2002 (as amended), from which followed on 18 March 2020 an extensive set of regulations made in terms of that Act.
As part of the broader response to the pandemic, the Minister of Trade and Industry on 19 March 2020 issued regulations under two separate provisions the South African Competition Act No. 89 of 1998 (as amended).
The series of regulations published during the State of Disaster allows certain agreements between competitors (section 4 ( 1)), as well as between an entity, its suppliers and its customers (section 5 (2) ).
However the leeway afforded to competitors, suppliers and customers are all aimed at alleviating the socio-economic harms presented by the coronavirus.
The various regulations issued shall be discussed below:
Exemptive regulations
1. The block exemption for the Healthcare Sector – 19 March 2020 and 8 April 2020.
a. The purpose is to promote access to healthcare, prevent the exploitation of patients, enable the sharing of healthcare facilities, manage capacity and reduce prices. The practical effect of this, is that various role players in the healthcare sector, as well as the Department of Health are allowed to coordinate regarding the allocation of patients; the use of facilities, procurement of consumables and pharmaceuticals; the availability of medical supplies .The exemption also allows for agreements and practices intended to reduce the costs, diagnosis, tests, treatment and other preventative measures (including vaccines).
2. The block exemption for the Banking Sector – 23 March 2020
a. The Purpose is to enable the banking sector to minimise the negative impact on the ability of customers to manage their finances during the national disaster, and to be able to continue normal operations beyond the national disaster; and to enable the banking sector to manage the banking infrastructure, including the payment infrastructure, ATMs and branches.
Its practical effect is that of exempting, from scrutiny by the competition authorities, the following:
• Agreements or practices in the banking sector with the sole purpose of ensuring essential payment systems continue to operate during the national disaster; and
• Agreements or practices with the sole purpose of ensuring the management of debtors and extension of credit continue during the national disaster.
3. The block exemption for the Retail Property Sector – 24 March 2020
a. The purpose is that it allows agreements or practices amongst and between designated retail tenants and retail property landlords, with the sole purpose of ensuring the survival of tenants of retail properties during the national disaster. (3)
This includes engagements regarding payment holidays, rental discounts, and limitation on the eviction of tenants, the suspension or adjustment to certain provisions of lease agreements.
4. The block exemption for the Hotel Industry – 27 March 2020
a. Its purpose is to enable the hotel industry to collectively engage with the Department of Health and the Department of Tourism in respect of identifying and providing appropriate facilities for persons placed under quarantine, as determined by the Department of Health. (4)
Exploitative regulations
1. Consumer and customer protection regulations and directions – 19 March 2020
a. Its purpose it to protect consumers and customers from unconscionable, unfair, unreasonable, unjust or improper commercial practices during the national disaster. The regulation prohibits firms from charging excessive prices to consumers in respect of goods and services that are deemed as protected goods or services in the regulations themselves. (5)
The regulations have empowered the Competition Commission to take policy decisions to prioritise such complaints in order to ensure that firms exploiting consumers are quickly prosecuted and penalised.
An example can be seen in the case of DICHEM whereby the Commission investigated Dis-Chem after allegations of excessive pricing on essential hygienic goods . (6)
The commission referred Dis-Chem to the Competition Tribunal, alleging its investigation showed the pharmacy inflated prices to the detriment of customers and consumers in contravention of the Competition Act . (7)
Another example is of Sicuro Safety CC (Sicuro) and Hennox 638 CC t/a Hennox Supplies (Hennox) that have been charged with the contravention of section 8(1)(a) the Competition Act, read with Regulation 4 of the Consumer Protection Regulations. (8)
This follows the Commission’s investigation which found that the two firms’ prices for the Filtering Face Piece 1 (FFP1) mask increased astronomically by more than 969.07% and 956%, as charged by Sicuro and Hennox, respectively.
The firms have not furnished the Commission with any reasonable explanation for such excessive price increases.
However in order to address this concern, the Commission has asked the Tribunal to issue an interdict prohibiting the firms from continuing with any excessive pricing conduct, together with such pricing order as may be necessary to remedy this conduct.
COVID-19 Excessive Pricing Complaints Referrals – 6 April 2020.
a. Its purpose is provide for rules regulating complaint referrals heard in the Tribunal for alleged contraventions of the Competition Act relating to excessive pricing in respect of protected goods. (9) The practical effect of this regulation is that it provides for an expedited process for the referral and prosecution of complaints for the contravention of the consumer and customer protection regulations. 
1. After the above regulations were issued South Africa has added its name to the list of countries using competition laws as a tool both to facilitate the healthcare response to the pandemic and protect consumers from manipulation. It is without a doubt that under normal circumstances competition is needed in markets to keep prices low, but with the COVID-19 crisis wreaking havoc on markets not only in South Africa but the world over, collaboration has taken precedence. The pandemic’s sweeping economic impact has left governments balancing between defending competitions, so prices do not become prohibitive, and granting exemptions to competition rules to ensure the survival of entire economic sectors. South Africa is not the only government that has enacted sector-specific legislation granting different levels of exemptions from anti-collusion rules to businesses to mitigate the pandemic’s ripple effect on economies. For instance, Norway has granted a three-month exemption from the national antitrust laws to the airline transport industry. Competition authorities in Kenya and China have heavily sanctioned retailers engaged in excessive pricing of health-related products.
2. It is therefore important that during this pandemic those businesses especially in the essential service sector should comply with the regulations that have been put in place. Businesses should avoid being tempted to be on the wrong side of the law. This is important to note as authorities are watching for exploitative practices, such as excessive price increases. Although supply and demand dynamics will change, businesses should consider how large price increases might be perceived and whether they might trigger an investigation.


  1. Competition Act No. 89 of 1998
  2. Competition Act No. 89 of 1998
  3. Competition Act (89/1998): Block Exemption for the Retail Property Sector, 2020
  4. Competition Act (89/1998): Covid-19 Block Exemption for the Hotel Industry, 2020
  5. Competition Act (89/1998): Consumer and Customer Protection and National Disaster Management Regulations and Directions
  6. Dis-Chem charged for price gouging on face masks during coronavirus outbreak – FIN24 (April 23 2020)
  7. Ibid
  8. Two major suppliers of face masks charged for price gouging- BizCommunity Competition Law South Africa
  9. Competition Act (89/1998): Regulations on Competition Tribunal Rules for COVID-19 Excessive Pricing Complaint Referrals

Disclaimer: this note does not constitute, nor should it be construed as, the giving of legal advice and it is recommended that one of our attorneys is contacted 010 592 2321