Senwes Limited v Competition Commission of South Africa

Senwes Limited, a vertically integrated firm operating grain storage (upstream) and grain trading (downstream), historically enjoyed a near-monopoly over grain storage silos in certain regions. After agricultural market deregulation in 1995, Senwes retained control over essential storage infrastructure. Senwes charged storage fees under a capped tariff system that benefited farmers but, from May 2003, withdrew this capped tariff for traders, requiring them to pay uncapped daily tariffs. Farmers who sold grain to Senwes could still benefit from the capped tariff, while those selling to rival traders could not. The Competition Commission alleged that this differential pricing raised rivals’ costs, foreclosed competition in downstream grain trading markets, and constituted an abuse of dominance.

The appeal by Senwes against the finding of a contravention of section 8(c) was dismissed, and the cross-appeal by the Competition Commission in respect of section 8(d) was not upheld. The Tribunal’s finding of abuse of dominance based on margin squeeze under section 8(c) stood.

This case is a leading South African authority recognising margin squeeze as an exclusionary abuse under section 8(c) of the Competition Act. It clarifies pleading requirements in competition proceedings and affirms that substance prevails over form in assessing complaint referrals. The judgment is important for dominant vertically integrated firms controlling essential facilities, confirming that pricing practices that raise rivals’ costs and foreclose downstream markets may constitute abuse of dominance.