Navigating Competition Law in South Africa

As South Africa’s electronic security industry continues to grow and evolve, distributors and manufacturers face a complex challenge: how to manage online sales channels without falling foul of South African Competition Law.

At ESDA, we aim to provide our members with clarity — especially as the landscape shifts with the rise of e-commerce and grey-market imports. Here’s what you need to know.

What Does South African Competition Law Say?

The Competition Act No. 89 of 1998 promotes and maintains competition in South Africa. It prohibits practices that:

Fix prices, divide markets, or limit competition (Section 4);
Restrict resale pricing or enforce minimum resale prices (Section 5);
Engage in exclusive dealing that forecloses the market to competitors (Section 8);
Impose unjustifiable barriers to entry (Section 2 of the Act and interpreted through case law).

In simpler terms: manufacturers and distributors cannot dictate how or at what price a reseller must sell a product, particularly in online marketplaces.

The Rise of Online Retail – A Legal Headache?

Online sales bring greater market reach, but also introduce new compliance pressures:

Resellers offering rock-bottom pricing can undercut trusted distributors.
Cross-border purchases often bypass traditional supply chains.
After-sales service and product warranties may be compromised when goods are not purchased through authorised channels.

Unfortunately, there’s very little recourse under competition law for suppliers or manufacturers who want to enforce minimum resale pricing or stop unauthorised online sales — even when it affects brand value or customer support standards.

What Can Manufacturers and Distributors Do?

While you can’t legally enforce pricing, you can still protect your brand and business relationships with careful policies and support structures:

Selective Distribution Agreements:
Set clear criteria for who qualifies to sell your products — especially online. This isn’t about price control; it’s about protecting brand integrity and customer experience.
Authorised Reseller Programs:
Publicly highlight and support authorised sellers who meet quality, service, and training standards.
Educate End Users:
Make it clear which sellers offer genuine warranties, local technical support, and qualified advice.
Monitor Grey Markets:
Track product serial numbers and flag unauthorised imports. While enforcement may be limited, it helps identify trends and gaps.

At ESDA, we understand the frustration many members face in maintaining fairness in a rapidly evolving digital marketplace.

Our goal is to help members navigate these limitations legally, and offer a forum where distributors and manufacturers can share experiences, develop stronger supplier relationships, and promote ethical, competitive trade.

We encourage members to focus on education, transparency, and long-term brand trust — the real currency in today’s connected market.

Stay Informed. Stay Competitive.

While the law may limit what can be controlled in terms of online sales, knowledge is your strongest ally.

Reach out to ESDA for guidance on best practices, policy templates, or to connect with fellow members facing similar challenges.

For more resources and updates, visit www.esda.org.za

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