The recent judgment handed down by the Competition Appeal Court in America Soda Ash Corporation v Botswana Ash (Pty) Limited has important lessons for foreign entities intending to do business in South Africa, or which have arrangements that have an economic effect within South Africa.

In particular, the judgment addressed the meaning of Section 3(1) of the Competition Act 1998, which deals with the application of the act to "all economic activity within, or having an effect within, the republic". In this case, the economic activity included an alleged cartel arrangement concluded in the United States between several American producers of soda ash.

American Soda Ash's legal team had argued that in the absence of allegations that its conduct had resulted in deleterious or negative effects within South Africa, the South African competition authorities lacked jurisdiction to hear the complaint. The Competition Appeal Court confirmed the Competition Tribunal's decision that the conduct complained of need not result in negative effects within South Africa in order to found jurisdiction under the act.

In finding against a restrictive interpretation of Section 3(1), the Competition Appeal Court indicated its willingness to adopt a wide approach to the application of the act, and commented that "the extra-territorial application of domestic competition laws is one of the ways to combat the operation of international cartels".

Consequently, the appeal judgment provides definitive confirmation that the Competition Act confers a measure of extra-territorial jurisdiction on the competition authorities to evaluate any conduct or agreements which may have an economic effect within South Africa. Such economic effect need not be found to be harmful to found jurisdiction.

For further information on this topic please contact Anthony Norton at Webber Wentzel Bowens by telephone (+27 11 530 5272) or by fax (+27 11 530 6272) or by email ([email protected]).