The Competition Act No 89 of 1998 which regulates competition in South Africa, seeks to promote and maintain competition and the main purpose of the Act is to:
1. promote the efficiency. adaptability and development of the economy;
2. provide consumers with competitive prices and product choices;
3. promote employment and advance social and economic welfare;
4. expand opportunities for South African participation in the world market and recognise the rote of foreign competition in the Republic;
5. ensure that small md medium-sized enter-prises have an equitable opportunity to participate in the economy; and
6. promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons.
In terms of section 22 of the Constitution of the Republic of South Africa, every citizen has the right to choose their trade, occupation, or profession freely. The operation of a trade, occupation, or profession may be regulated by law and competition is necessary for the
functioning of an organised free market economy. Competitive trading is unlawful when it involves wrongful interference with another traders rights which result in loss and damages. Another way to unlawfully interfere with a trader’s right is to infringe the traders’ business goodwill. The term business goodwill can be defined to include anything that adds value to a business and this can include the business’s name and reputation and connections. The case of Mullane and Another v Smith and Others, includes the misuse or disclosure of
confidential or secret information. The High Court found that it is unlawful to use a competitor’s confidential information with an intention to gain a trade advantage. Instances of misuse of such information are very often found where a person has left an employer to start
his own business, taking with them the secret information of the trade of the previous employer. Such information could include the previous employer’s client lists, business schemes, trade secrets, intellectual property and other confidential information which adds
value to the previous employer’s trade. There are numerous acts that does result in unlawful competition some of these instances are:
1. Trading in contravention of an express statutory prohibition
2. Fraudulent misrepresentations made by a rival trader as to that rivals own business
3. Publication by rival trader of injurious falsehoods concerning its competitions business
4. Passing of a rival trader of that traders of goods or business as being that of the competitor
5. Unfair use of a competitor’s fruits and labour
6. Inference with character and merchandising rights
7. Misuse of confidential information in order to advance one’s own business interests and activities at the expense of a competitor’s
The test for wrongfulness is one of fairness and honesty having regard for boni mores and a general sense of justice in the community. Questions of public policy, such as significance of a free market and competition are important aspects.
The case of Mullane and Another v Smith and Others provided that unlawful competition falls within the scope of the common law principles of delict, specifically the Aquilian action, before any person can be held, the following four requirements must be present:
1. a wrongful act or omission;
2. fault in the form of either intention or negligence;
3. a causal link between the wrongdoer’s behaviour and the loss sustained; and
4. Monetary and or quantifiable loss suffered by the victim.
In the case of Schultz v Butt it was stated that unlawful competition requires a wrongful interference with another person’s rights as a trader. The wrongful interference can occur when a trader engages in any excluded practices in terms of the Competition Act or an act of
passing-off. Every person is entitled to freely carry out his/her trade in competition with his/her competitors. In instances where there is unlawful competition, the affected trader must establish all the requisites of Aquilian liability, including proof that the defendant has
committed a wrongful interference with the trader’s rights.
