Background: Section 8(a) of the Act prohibits a dominant firm from charging an excessive price to the detriment of consumers. An "excessive price" is defined as "... a price for a good or service that bears no reasonable relation to the economic value of that good or service and is higher than that economic value." Economic value is not defined in the Act. Only two cases of excessive pricing has been prosecuted under the new SA Competition Act. The first was the Mittal Steel case (Mittal Steel South Africa Ltd and two Others v Harmony Gold Mining Company Ltd and Another (Case No. 70/CAC/Apr07)) and the second was the Sasol Chemical Industries (SCI) case (The Competition Commission and Sasol Chemical Industries Ltd (Case No. 48/CR/Aug10)). In both these cases the Tribunal found in favour of the Commission. However, in the Mittal case the Competition Appeal Court (CAC) referred the case back to the Tribunal and in the SCI case the CAC upheld the appeal by SCI (Sasol Chemical Industries Ltd v Competition Commission (Case No. 131/CAC/Jun14)).
Task: Read the ruling in both the Mittal Steel and SCI case and write a comparative report on the methodology all the parties followed in their assessment of excessive pricing. In your report specifically address the following:
1. Factors assessed to determine dominance.
2. Factors considered in defining the relevant product and geographical market.
3. Methodology followed to determine an excessive price and economic value (This is the main focus of the assignment).
4. Role of the "special cost advantage".