Restrictive vertical practices

The Competition Act regulates the relationship between a firm and its suppliers or its customers, or both.
In terms of the Competition Act all vertical restrictions other than “minimum resale price maintenance” are evaluated in terms of the “rule of reason”. This means that agreements between parties in a vertical relationship are prohibited unless the parties can show that the agreement has pro-competitive consequences which outweigh any anticompetitive consequences.

The Competition Act prohibits “minimum resale price maintenance”.

An administrative penalty of up to 10% of the transgressing firm’s annual turnover during the firm’s preceding financial year may be imposed on first-time offenders of the “per se” prohibitions.