A critical evaluation of the proposed treatment of special cost advantages in excessive prices law
Firms have a special cost advantage when they receive a discount or subsidy without assuming any risk or without being innovative. It is thus a received benefit, rather than an earned benefit, which results in a cost below the normal competitive level. The treatment of these special cost advantages...
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doaj-5cf1df9744914db08996a14d43baccbd2021-02-02T07:53:13ZengAOSISJournal of Economic and Financial Sciences1995-70762312-28032014-09-017460761810.4102/jef.v7i4.387328A critical evaluation of the proposed treatment of special cost advantages in excessive prices lawAndrew Sylvester0University of JohannesburgFirms have a special cost advantage when they receive a discount or subsidy without assuming any risk or without being innovative. It is thus a received benefit, rather than an earned benefit, which results in a cost below the normal competitive level. The treatment of these special cost advantages has been a complicating factor when the firm in question is a dominant firm accused of charging an excessive price. The relevant benchmark against which to assess the price charged by the firm is the notional competitive market price, which in turn is linked to the cost of production under competitive conditions. This led to the Competition Appeal Court recommending that special cost advantages should be excluded from the cost build-up of the dominant firm when assessing excessive prices allegations. This would artificially inflate the dominant firm’s costs and reduce the likelihood of a finding against the firm. This recommendation by the CAC has a number of theoretical and practical problems, and it remains unclear how special cost advantages should be treated in South African competition law cases.https://jefjournal.org.za/index.php/jef/article/view/387excessive pricesspecial cost advantagescompetition lawabuse of dominancemonopolyexploitative abuse |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Andrew Sylvester |
spellingShingle |
Andrew Sylvester A critical evaluation of the proposed treatment of special cost advantages in excessive prices law Journal of Economic and Financial Sciences excessive prices special cost advantages competition law abuse of dominance monopoly exploitative abuse |
author_facet |
Andrew Sylvester |
author_sort |
Andrew Sylvester |
title |
A critical evaluation of the proposed treatment of special cost advantages in excessive prices law |
title_short |
A critical evaluation of the proposed treatment of special cost advantages in excessive prices law |
title_full |
A critical evaluation of the proposed treatment of special cost advantages in excessive prices law |
title_fullStr |
A critical evaluation of the proposed treatment of special cost advantages in excessive prices law |
title_full_unstemmed |
A critical evaluation of the proposed treatment of special cost advantages in excessive prices law |
title_sort |
critical evaluation of the proposed treatment of special cost advantages in excessive prices law |
publisher |
AOSIS |
series |
Journal of Economic and Financial Sciences |
issn |
1995-7076 2312-2803 |
publishDate |
2014-09-01 |
description |
Firms have a special cost advantage when they receive a discount or subsidy without assuming any risk or without being innovative. It is thus a received benefit, rather than an earned benefit, which results in a cost below the normal competitive level. The treatment of these special cost advantages has been a complicating factor when the firm in question is a dominant firm accused of charging an excessive price. The relevant benchmark against which to assess the price charged by the firm is the notional competitive market price, which in turn is linked to the cost of production under competitive conditions. This led to the Competition Appeal Court recommending that special cost advantages should be excluded from the cost build-up of the dominant firm when assessing excessive prices allegations. This would artificially inflate the dominant firm’s costs and reduce the likelihood of a finding against the firm. This recommendation by the CAC has a number of theoretical and practical problems, and it remains unclear how special cost advantages should be treated in South African competition law cases. |
topic |
excessive prices special cost advantages competition law abuse of dominance monopoly exploitative abuse |
url |
https://jefjournal.org.za/index.php/jef/article/view/387 |
work_keys_str_mv |
AT andrewsylvester acriticalevaluationoftheproposedtreatmentofspecialcostadvantagesinexcessivepriceslaw AT andrewsylvester criticalevaluationoftheproposedtreatmentofspecialcostadvantagesinexcessivepriceslaw |
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