The Minister of Trade, Industry and Competition has published draft regulations which exempt certain business practices by, and agreements between, SMMEs from key prohibitions in the Competition Act.   These regulations are aimed at giving SMMEs more freedom to collaborate with each other in order to stimulate their growth and participation in South Africa’s economy.  The regulations provide that the prohibitions against collusion and generally anti-competitive horizontal and vertical agreements will not apply to certain types of business practices by, and agreements between, SMMEs. 

The types of business practices and agreements exempted by the draft regulations include research and development agreements, production and toll manufacturing agreements, joint purchasing agreements, commercialisation agreements, standardisation agreements, determining joint selling prices charged to intermediaries and other business customers (the regulations define business customers as those who resell an SMME’s product or service or use it as an input in production – more about this later), and collective negotiations with large buyers or suppliers.  The fixing of selling prices to end consumers is still prohibited.  SMMEs who want to rely on on the exemptions must notify the Competition Commission and the dtic in writing that they are doing so and provide details of their business practice or agreement.

SMMEs which stand to benefit from the exemptions are small, micro and medium-sized businesses as defined in regulations published by the Minister in 2019.  Those regulations can be accessed here: www.wylie.co.za/LegalNotices.

While the regulations are clearly aimed at stimulating growth of SMMEs, the regulations are not a carte blanche and those relying on the draft regulations will need to tread carefully because they are far from clear and the reporting requirements may have unintended consequences. If you want to comment on the regulations, you have until 30 September 2022 to do so and comments can be sent to the Acting Director-General: Department of Trade, Industry and Competition, for the attention of Mrs Linda Herbst, email: lherbst@thedtic.gov.za or hand delivered at 3rd Floor, Block E, 77 Meintjies Street, Sunnyside, 0132.