Competition law and corporate social responsibility : a review of the special responsibility of dominant firms in competition law

• Author: Phumudzo S. Munyai
• DOI: 10.17159/2225-7160/2020/v53a18
• Published date: 01 June 2020
• Date: 01 June 2020
• Pages: 267-285

Competition law and corporate social responsibility 267

Competition law and corporate social

responsibility: a review of the special

responsibility of dominant firms in

competition law

Phumudzo S. Munyai

LLB LLM LLD

Associate Professor, Department of Private Law, University of Pretoria

SUMMARY

“with great power, comes great responsibility”1

Few concepts aptly captures competition law’s expectations on firms with

substantial market share or market power than ‘with great power, comes

great responsibility’, made popular in American movie Spider Man.2

Although Spider Man helped made the concept popular, its true origin may

be religious teachings and ancient cultural wisdoms. The Bible, King James

Vers io n, warns that “For unto whomsoever much is given, of him shall be

much required”.3 In African culture, the value or principle of Ubuntu, with its

emphasis on common humanity and good, counsels that one person

should not thrive at the expense, or to the exclusion, of others.

The relevance and application of these principles or values to commercial

relationships and rules of trade regulation, in particular competition law, is

the object of this paper. In some competition law jurisdictions, abuse of

dominance rules recognise, explicitly or impliedly, that firms with

substantial market share or market power have a special ‘duty’ or

‘responsibility’ to the market.4 The purpose of this paper is to investigate

the link between certain elements of this special duty or responsibility and

Corporate Social Responsibility (“CSR”).5 It is the argument of this paper

that the principle of special responsibility, as applied in competition and

abuse of dominance law, has elements of CSR.

1 Lee & Ditko Amazing Fantasy No. 15: Spider Man (1962) 13.

2 Adapted from Lee & Ditko 13.

3The Holy Bible, Luke 12:48.

4Michelin v Commission Case No. C-322/81. Wood “EU Competition Law and

the Internet: Present and Past Cases” 2011 Competition Law International

44; Szyszczak “Controlling Dominance in European Markets” 2010

Fordham International Law Journal 1755.

5 It is the assumption of this paper that the reader has some basic knowledge

of what CSR entails as CSR is already a popular concept in business and

legal culture. However, for the sake of completeness, a brief explanation of

CSR will be provided in discussion that will follow. Because it is not the

main object of this paper to provide a full exposition of what CSR entails, it

is recommended that appropriate sources on what CSR entails be

consulted, see Agudelo, Jóhannsdóttir & Davídsdóttir “A literature review of

the history and evolution of corporate social responsibility” 2019

International Journal of Corporate Social Responsibility 1.

How to cite: Munyai ‘Competition law and corporate social responsibility: a review of the special

responsibility of dominant firms in competition law’ 2020 De Jure Law Journal 267-285

http://dx.doi.org/10.17159/2225-7160/2020/v53a18

268 2020 De Jure Law Journal

1Introduction

It is generally accepted that the main or primary goal of competition

law is to promote competition.6 Competition entails the existence of

commercial rivalry among different sellers of the same or similar services

or products striving to win custom. Competition, and the pursuit thereof,

is the ultimate antithesis of monopoly.7 One of the likely outcomes of

competition is that one seller may gain more custom than others, while

others may have to make do with little or no custom. In worst case

scenario, those with little or no custom may be forced to exit the market.

In this context, the difficult question for competition law, and indeed

its main paradox, is what must the law do to ensure that competition in

the market is maintained? Put differently, when one seller emerges

victorious from the competitive struggle, what is the role of competition

law and its enforcement agencies in the market and towards the

emergent dominant firm specifically? To maintain a healthy competitive

balance in the market, can competition law and its enforcement agencies

require or expect the successful and thus dominant firm, once victorious,

to start “pulling its competitive punches”8 in order to “leave a certain

amount of money on the table”9 for other competitors in the market so

as to avoid destroying competition?

Competition policy and law makers recognise that while the free

market system is still a reliable mechanism for the allocation of

resources, they also accept that in appropriate circumstances there may

be justification for intervention in markets, particularly where such

markets have failed or where they do not allocate resources more

efficiently. Markets characterised by monopoly or firms with substantial

market share are a good example of markets with poor and undesirable

resource allocation. Competition law provides a mechanism to control

the actions of monopolies and firms with substantial market share. The

6 Brassey et al Competition Law (2002) 2.

7 This is consistent with the view that the origin and development of

competition law had its roots in the widespread hostility that existed

towards monop oly, Standard Oil Co of New Jersey v United States 221 US 1

1911 77-82; United States v Aluminium Company of America 148 F2d 416 2d

Cir 1945 427-429; United States v Columbia Steel Co 334 US 495 1948 536.

Orbach “How Antitrust Lost its Goal” 2013 Fordham Law Review 2254;

Bradley, Jr. “On the Origins of the Sherman Act” 1990 Cato Journal 737-738;

Fox “Monopolization and Dominance in the United States and the

European Community: Efficiency Opportunity and Fairness” 1986 Notre

Dame Law Review 983; Letwin Law and Economic Policy in America

(1967)15, 54 and 59; Thorelli The Federal Antitrust Policy: Origination of an

American Tradition (1954) 1–5.

8Goldwasser v Ameritech Corp 222 F.3d 390 7th Cir. 2000 397-398. US

Department of Justice Competition and Monopoly: Single-Firm Conduct under

Section 2 of the Sherman Act (2008) 8.

9Harmony Gold Mining Company Ltd and Another v Mittal Steel South Africa

Ltd and Another Case No 13/CR/FEB04 para 131.