Answer to Question #47413 in Economics for Jafta

Question

What are the different factors the Tribunal took into account to determine Mittal’s & Sasol's dominance and methods, methodology and economic variables used to determine whether a price is ‘excessive’.

Answer 1

the Competition Tribunal (Tribunal) found that Sasol Chemical Industries Ltd (SCI), a subsidiary of Sasol Ltd (Sasol), had charged domestic customers excessive prices for purified propylene and polypropylene between 2004 and 2007 in contravention of section 8(a) of the Competition Act (Act). Section 8(a) prohibits a dominant firm from charging an excessive price to the detriment of consumers. An "excessive price" is defined as "… a price for a good or service that bears no reasonable relation to the economic value of that good or service and is higher than that economic value." The Act does not include a definition of "economic value". The Tribunal imposed an administrative penalty on SCI totalling ZAR 534 million for the contraventions. It also imposed behavioural remedies aimed at determining SCI's future domestic pricing in respect of both purified propylene and polypropylene.