Draft Vertical Restraint Regulations & Their Potential Impact On Competition Law

On 3 June 2024, the Department of Trade, Industry and Competition published draft vertical restraint regulations for comment (“the Draft Regulations”) along with a memorandum to provide context in respect of the draft regulations. These regulations relate to the prohibition on restrictive vertical practices as set out in section 5 of the Competition Act, 89 of 1998 (“the Act”) and attempt to provide a framework on how the Competition Commission (“the Commission”) should approach practices which are potentially prohibited in terms of section 5 of the Act.

Section 5 of the Act regulates the relationship between firms in a vertical relationship (for example suppliers and distributors) and section 5(1) provides that agreements between such firms are prohibited “…if it has the effect of substantially preventing or lessening competition in a market, unless a party to the agreement can prove that any technological, efficiency or other pro-competitive, gain resulting from