etrochemical giant Sasol rid itself of half a billion rand in liability this week – and has probably succeeded in squashing government’s hopes that competition courts will play a defining part in extracting developmental prices from former state-owned monopolies.
Competition authorities cannot be “price regulators” and should stop allowing economists to pretend that they are legal experts, declared Competition Appeal Court Judge President Dennis Davis.
In a harsh judgment released on Thursday, he overturned two fines totalling R534 million, which was imposed on Sasol by the Competition Tribunal last year.
The fines related to charges of “excessive pricing”, a nebulous concept tied to technical and theoretical presumptions about the “real economic value” of a product (
The Competition Commission, which brought the case, and the tribunal that judged it, came in for a drubbing from Davis.
He found that the tribunal’s decision to fine Sasol was “hard to understand” and apparently based on a very selective reading of the one other major judgment in South Africa around excessive pricing – Davis’ own 2007 dismissal of a case against ArcelorMittal SA.
The tribunal had apparently not read his earlier ArcelorMittal SA judgment properly, Davis suggested in his comments this week.
ArcelorMittal SA and Sasol are the two major former state-owned monopolies that have been in the government’s cross hairs for alleged abuse of their publicly funded dominance in the economy.
Getting both Sasol and Mittal to adopt something like a developmental pricing model has been a long-standing aspiration in South African policy circles.
When the Sasol case went to the tribunal in 2013, officials in the department of trade and industry couched it in terms of South Africa claiming its rightful advantage as a result of historically state-subsidised industries.
A scheme to directly regulate the price of propylene if the competition authorities did not impose a satisfactory remedy was being discussed, a government source said at the time.
“A great deal was made by the commission and the tribunal with regard to the origin of the appellant’s dominance, in particular the history of state support,” said Davis.
The evidence around what constituted the economic value of Sasol’s propylene was, however, found to be flimsy.
Davis laid into the testimony of the commission’s economic expert Simon Roberts, criticising his “unfortunate tendency” to “provide the tribunal with his legal expertise
EXPERT VIEW Judge Dennis Davis