Measuring excessive pricing as an abuse of dominance – an assessment of the criteria used in the Harmony Gold/Mittal Steel complaint

Abstract

The Competition Tribunal recently found Mittal Steel SA guilty of abusing its super-dominant position by charging excessive prices to the detriment of consumers of flat carbon steel products. This article assesses the economic tests to be used for excessive pricing in light of the case and reviews the lessons that can be learned from the evidence required for the different tests. It discusses issues related to using profitability as a test and points out problems and pitfalls in profitability measures. JEL L41

South African competition policy on excessive pricing and its relation to price gouging during the COVID‐19 disaster period

“…As is clear from this literature and case law, practitioners have avoided relying on intertemporal comparisons in the seminal excessive‐pricing cases in South Africa, preferring cost‐based benchmarks. Roberts (2008), Das Nair (2008) and Calcagno and Walker (2010) provide in‐depth analyses of cost‐based benchmarks in the seminal Mittal‐Harmony case, highlighting the variety of challenges associated with cost and profit measurement.…”

Competition Law and Economic Regulation

“…There have been at least six cases dealing with excessive pricing in South Africa over the past decade in a range of industries, including pharmaceuticals (antiretroviral drugs), telecommunications, steel, petrochemicals and fertilisers. The first key case in the steel industry, Harmony Gold v Mittal Steel SA (the Mittal case), was the subject of Competition Tribunal and Competition Appeal Court (CAC) rulings, and has been written about extensively (Calcagno and Walker, 2010;das Nair, 2008;Davis, 2011;Ezrachi and Gilo, 2009;Lewis, 2009;Roberts, 2008). The other cases were settled prior to being heard and therefore the authorities have not made findings on the determination of economic value that can be debated (see Roberts, 2012, for descriptions), or findings were only made based on other contraventions, for example in the Telkom case in the telecommunications sector.…”