Competition Tribunal rules it can tackle excessive electricity prices

The Competition Tribunal has ruled that it does have jurisdiction to hear and decide a case in which a large producer of wire and steel products accuses a local municipality of charging it excessive prices for electricity.

Cape Gate referred a complaint to the Tribunal against the Emfuleni Local Municipality, accusing the municipality of contravening the Competition Act by charging it excessive prices for electricity since 2017.

Emfuleni contains the urban centres of Vanderbijlpark and Vereeniging. It also includes the highly populated areas of Sebokeng and Evaton, and the politically significant township of Sharpeville.

Cape Gate self-referred the complaint to the Tribunal after the Competition Commission decided against referring it.

Before the merits of the main application could be heard, the municipality raised a technical legal point on jurisdiction.

It argued that the Tribunal does not have jurisdiction to hear Cape Gate’s complaint.

This was because the Electricity Regulation Act (ERA) gives power to the sector regulator, the National Energy Regulator of South Africa (Nersa), to investigate complaints regarding discrimination of tariffs or failure by a licensee to abide by its license conditions.

“In brief, the municipality argued that Cape Gate’s excessive pricing complaint falls within Nersa’s investigatory powers — and that Cape Gate should have exhausted ‘internal remedies’ or procedures set out in the ERA before approaching the competition authorities,” the Tribunal stated.

Cape Gate, in turn, argued that Nersa does not have the power to adjudicate over alleged conduct relating to excessive pricing, as such powers lie exclusively with the competition authorities in terms of the Competition Act.

It emphasised the distinction between price discrimination and excessive pricing. It argued that even if Nersa has jurisdiction over alleged excessive pricing, such jurisdiction is shared concurrently between the competition authorities and Nersa.

In dismissing the municipality’s technical legal point on jurisdiction, the Tribunal concluded: “…it is beyond doubt that the Tribunal has jurisdiction with regard to this complaint of excessive pricing… The assertion that Cape Gate was required to pursue an ‘internal remedy’ through a complaint to Nersa is without foundation”.

It also agreed with Cape Gate that it does not have to determine whether the ERA gives Nersa the power to deal with complaints of excessive (as opposed to discriminatory) pricing.

If Nersa does have that power, there is concurrent jurisdiction, the Competition Tribunal found.

Citing case law, the Tribunal noted that where there is concurrent jurisdiction, it will have authority unless an express provision ousts its jurisdiction.

Emfuleni raised the technical point that there was no concurrency with regard to this matter, arguing that concurrency only commenced in 2021 after the Competition Commission and Nersa signed a memorandum of agreement (MOA).

The Tribunal found that this argument is incorrect.

“Concurrency arises from the Act, not from the conclusion of the MOA,” it stated.

“Furthermore, the MOA itself states that it is not intended to be a legally enforceable document and merely seeks to describe the nature and co-operative intentions of the parties thereto and to suggest guidelines for co-operation, with the result that nothing shall diminish the full autonomy of either party or constrain either party from discharging its statutory functions.”

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Competition Tribunal rules it can tackle excessive electricity prices