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First predatory pricing case before the Competition Tribunal | African Antitrust & Competition Law

THE DIFFICULTY TO PROVE A PREDATORY PRICING CONDUCT

For the first time in the sixteen years in which the new Competition Act has been in operation,[2] the Tribunal assessed a predatory pricing conduct.

A predatory pricing behavior means that prices or rates are not market related but below what would be expect to be a market price. Predatory pricing is only a transient pleasure for consumers as once competitors are eliminated then the low price honeymoon is over and the predator can impose high prices to recoup the losses sustained in the period of predation.

To find an exclusionary conduct and thus a contravention of section 8(c) based on predation,[3] the Commission is required to prove that Media24 priced below its average total cost (“ATC”)[4] accompanied by additional evidence of intention and recoupment of the loss of profits sustained during the predation period.

In terms of section 8(d)(iv) of the Act, to find an express predation contravention,  the Commission is required to prove that Media24 priced below “its marginal or average variable cost” (“AVC”)[5] (our emphasis). The standard adopted by the Commission is the average avoidable cost (“AAC”).[6] It is the cost the firm could have avoided by not engaging in the predatory strategy.[7] For the Commission, Media24 priced Forum below its AAC during the complaint period.

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First predatory pricing case before the Competition Tribunal | African Antitrust & Competition Law.

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