Less is more: Senwes and the concept of 'margin squeeze' in South African competition law

Open Access

Abstract

On 3 February 2009 the South African Competition Tribunal (CT) handed down a judgment in Competition Commission v Senwes Ltd Case No 110/CR/Dec06 (Senwes). In its decision the CT recognized the notion of a 'margin squeeze' as a distinct abuse in terms of s 8(c) of the Competition Act 89 of 1998 (the Act). By doing so, the CT chose to follow the prevailing academic and judicial opinion in the United Kingdom and Europe with regard to margin squeeze. In contrast to this convergence of opinion, the United States Supreme Court recently delivered judgment in Pacific Bell v linkLine Communications Inc No 07-512 [2009] (linkLine) in which it unanimously rejected the idea that a margin squeeze is an abuse of a dominant position under s 2 of the Sherman Act (formally known as the Act of July 2, 1890, ch 647, 26 Stat 209, codified as amended at 15 USC § 1 through 15 USC § 7). Our aim is to explore the controversial concept of a margin squeeze. The initial part of this note will examine the theoretical underpinnings of this abuse. Thereafter, the article will focus on the Senwes decision and will compare its findings with the position in the United Kingdom, the European Union and the United States.