Competition law issues

Restrictions on trade

Are practices that potentially restrict trade prohibited or otherwise regulated in your jurisdiction?

Several provisions of the Competition Act are relevant. Section 5(1) of the Competition Act prohibits agreements between firms in a vertical relationship that would have the effect of substantially preventing or lessening competition in a market or that relate to minimum resale price maintenance. The Competition Act further prohibits the abuse of dominance.

Price fixing, collusive tendering and market division as well as minimum retail price maintenance are thus per se prohibitions in the Competition Act.

Typical restraint provisions applicable to franchising, which may have possible competition implications, require careful consideration. It must be noted, however, that the extent to which competition concerns may arise would depend largely on market definition, which the Commission will do on a case-by-case basis, taking into account both geographic and product dimensions. The Competition Act prohibits the practice of minimum resale price maintenance. In the context of franchising, exclusive territorial restrictions by a dominant franchisor could also be found to be anticompetitive, unless the franchisor concerned can show that pro-competitive or efficiency gains outweigh the anticompetitive effects of the exclusionary act.

The Consumer Protect Act further limits the instances when tying of products is permissible.

Legal restrictions

Are there any legal restrictions in respect of the following provisions in licence agreements: duration, exclusivity, internet sales prohibitions, non-competition restrictions and grant-back provisions?

The duration of a licence rarely leads to competition concerns in itself, although it can be problematic where restrictions continue to apply to a licensee after a licensed right has expired.

Exclusivity may be permitted, depending on the market context; a licensor can also generally prevent licensees from actively soliciting customers from other countries. Prohibitions in internet selling have not yet been decided on by the courts.

Exclusive grant-back provisions, where the licensee is required to assign or license improvements back to the licensor on an exclusive basis, are likely to breach competition law. Non-exclusive grant-backs are permitted under the Competition Act.

IP-related court rulings

Have courts in your jurisdiction held that certain uses (or abuses) of intellectual property rights have been anticompetitive?

Not yet.