The Competition commission has issued a final price discrimination and buy power guidelines aimed at boosting small businesses and emerging entrepreneurs. The provision prohibits a firm with buyer power from imposing an unfair price or trading condition on suppliers.
The regulation has been issued in terms of section 8 and 9 of the Competition Act. The Competition Commission spokesperson Sipho Ngwema told Gauteng Newspaper that the amended regulation will ensure fairness on pricing conditions on small businesses.
“They will make sure that they prohibit dominate buyers in designated sector from imposing unfair prices and trading conditions on small businesses. This has been one of the biggest challenges for small business because they could not have power in terms of buying from other businesses,” said Ngwema.
This falls within a designated class of supplier, namely small and medium-sized businesses (SMEs) or suppliers owned and controlled by historically disadvantaged persons (HDP firms). However, only businesses which supply less than 20% of the buyer’s purchases of a particular product.
This provision only applies to designated sectors, which includes agro-processing, grocery wholesale and retail, e-commerce and online services.
Meanwhile the Competition Commission has issued enforcement guidelines on these Amendments in order to provide clear guidance to firms with buyer power. This also includes their contractual obligations under the law and to their suppliers in terms of their rights to contractual fairness.