Wednesday, April 9, 2008
Posted by D. Daniel Sokol
Simon Roberts, Chief Economist, Competition Commission of South Africa, and Visiting Professor, University of the Witwatersrand provides an interesting examination of Assessing Excessive Pricing: The Case of Flat Steel in South Africa.
ABSTRACT: South Africa's Competition Tribunal recently ruled in favor of the complainant in the first case of excessive pricing to come before it since the 1998 Competition Act established new institutions in 1999. This article examines the standards that should be adopted in assessing excessive pricing in a small developing country such as South Africa, through a review of the complainee, Mittal Steel South Africa's, pricing practices. It is argued that entrenched dominance is central to a finding of excessive pricing, where that position has not been attained through innovation or product development, and that the excessiveness of the pricing ought to be assessed against a range of indicators of pricing under effectively competitive conditions. It is argued that in a country such as South Africa, the conditions for excessive pricing are much more prevalent than in large industrialized economies.