What Makes A Price Excessive?

Section 8(a) of the Competition Act contains a single sentence, the length of which belies the complexity of the underlying prohibition. It reads simply that "it is prohibited for a dominant firm to charge an excessive price to the detriment of consumers". The legislative intent is equally apparent – a firm whose comparative size in a particular market means that it is less constrained by competition than would ordinarily be the case, is prohibited from abusing this enviable position by charging consumers excessive prices for the goods it sells or the services it provides. It is paradoxical, therefore, that one of the shortest provisions in the Competition Act continues to flummox competition law practitioners, regulators, judges and jurists alike.