Abstract
This study presents a qualitative comparative analysis of enforcement approaches applied in three countries, namely South Africa (SA), the European Union (EU), and the United States of America (USA), towards quantity-based price discrimination. The study highlights the differences and similarities in substantive legal and judicial tests adopted by the courts and competition authorities in establishing discrimination and assessing the anticompetitive effects of quantity-based price discrimination. For example, the three jurisdictions determined the competitive injury by drawing an inference from the sales diversion and profit loss endured by the disfavoured customer. The decisional practices and case law revealed that the economic and competitive effects of discrimination have not been explored. Instead, a form-based approach was predominantly followed. The study also revealed differences in legal requirements concerning equivalent transactions, goods or services of like grade and quality, and dominance; notably, the USA does not require dominance to condemn price discrimination. In contrast, the EU and SA target quantity-based price discrimination practiced by dominant firms. The EU courts also prohibit similar conditions applied to unequal transactions1 while this is not the case in the USA and SA. The three jurisdictions’ approaches are largely influenced by other policy objectives, namely, protection of small firms, protecting single market aspirations and fairness considerations. The study unearthed certain risks and negative implications concerning the current enforcement approaches for competition, investment, and consumers. There is a challenge of misaligned policy approaches between competition authorities and sector regulators in SA towards the treatment of quantity discounts. This requires careful management of policy imperatives incorporated into the concurrent powers of competition authorities and sector regulators’ respective legislation. Further research is required on appropriateness and risks of developing countries’ adoption of fairness and over-protection of small businesses and HDPs2 as the necessary overriding measures in the enforcement of discriminatory quantity discounts.
1, 17 July 1963. Italian Republic v Commission, 13-63, ECR-165 in the context of the ECSC Treaty.
2 Firms owned or controlled by historically disadvantaged persons (HDPs).
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Keywords: Quantity discounts; price discrimination; anti-competitive effects; legal tests; enforcement approaches; economies of scale; pro-competitive discrimination.