1. Introduction

Eskom occupies a distinctive position in the South African economy because of its historical role in electricity generation, transmission and supply. Its position raises an important competition-law question: does Eskom's substantial market position itself constitute an unlawful monopoly, or does liability arise only when that dominance is abused?

Under South Africa's Competition Act 89 of 1998, dominance is not, by itself, prohibited. The Act regulates the abuse of a dominant position. The Competition Commission expressly explains that the mere holding of a dominant position is not unlawful; enforcement requires proof of dominance together with prohibited or harmful conduct. (SAFLII)

This distinction is particularly important for electricity markets, where network characteristics, economies of scale, public-service obligations and infrastructure costs can naturally produce high concentration.

2. Statutory Framework

Section 7 — Determining Dominance

Section 7 of the Competition Act provides three principal thresholds:

45% or more market share → dominance;

35% to below 45% → presumed dominant unless the firm demonstrates that it does not possess market power;

Below 35% → dominance may nevertheless exist where the firm possesses market power. (SAFLII)

Therefore, market share is important but is not the complete test. The relevant market must first be defined, and the firm’s ability to exercise market power must then be assessed.

Section 8 — Abuse of Dominance

Section 8 prohibits specified forms of abusive conduct by a dominant firm. These include, among other things:

excessive pricing;

exclusionary conduct;

predatory pricing;

refusal or denial of access in appropriate circumstances;

discriminatory conduct;

buying up scarce inputs required by competitors;

margin squeezes. (SAFLII)

Consequently:

Dominance + prohibited abuse = potential Competition Act liability.

Dominance alone does not automatically establish a contravention.

3. Why Eskom Raises a Special Competition-Law Problem

Electricity is not an ordinary commodity.

The electricity industry contains several potentially distinct markets:

generation;

wholesale electricity trading;

transmission;

distribution;

electricity supply/retailing;

ancillary services;

procurement of inputs required by power stations.

The relevant market therefore cannot simply be described as "the energy market."

This principle was directly relevant in FFS Refiners (Pty) Ltd v Eskom. The Competition Tribunal rejected an attempt to define an extremely broad "energy market" consisting of oil, coal, gas and electricity. It stressed that dominance must be established in the same relevant market in which the alleged abuse occurs. (SAFLII)

This is particularly important when analysing Eskom because its market power can vary substantially depending upon the product and geographic market being examined.

4. FFS Refiners v Eskom — Foundational Eskom Dominance Case

FFS Refiners (Pty) Ltd and Eskom Holdings SOC Ltd

The case is one of the most important authorities specifically concerning Eskom and dominance under South African competition law.

FFS alleged that Eskom was dominant because it supplied approximately 98% of South Africa's electricity requirements. It attempted to define the relevant market broadly as an energy market encompassing different energy sources.

The Competition Tribunal rejected this approach.

It held that the complainant had failed adequately to connect the alleged dominance with the market in which the alleged abuse occurred. The Tribunal emphasised that a complainant must properly establish the relevant market before establishing dominance. (SAFLII)

Legal significance

The case establishes an important methodological rule:

Eskom's enormous position in electricity does not automatically establish dominance in every market connected with electricity.

For example, dominance in electricity generation would not automatically establish dominance in:

fuel procurement;

engineering services;

coal supply;

equipment manufacturing;

other energy markets.

Each allegation requires a properly defined relevant market.

5. Mlonzi v Eskom — Eskom as a Monopsony

A more recent and particularly significant decision is Mlonzi and Another v Eskom Holdings SOC Ltd and Another [2023] ZACT 61.

Here, the dispute concerned Eskom's procurement of fuel oil.

The applicants alleged that Eskom had approximately 95% of South Africa's fuel-oil procurement market and therefore exercised monopsony or buyer power. The Tribunal accepted, for purposes of the application, that Eskom was the primary consumer and accounted for approximately 95% of available fuel-oil procurement. (SAFLII)

This is significant because competition law does not concern only seller-side monopoly power.

A powerful purchaser can exercise monopsony power.

Monopoly versus monopsony

The Tribunal described monopsony power as essentially the mirror image of monopoly power. (SAFLII)

Thus, Eskom's market dominance can arise not merely because it sells electricity, but because it may be an exceptionally large purchaser of inputs and services.

6. Abuse of Dominance in Mlonzi

The applicants alleged that Eskom's decision to deregister a supplier constituted an abuse of dominance.

The Tribunal recognised that Eskom, as a dominant firm, has special competition-law responsibilities toward suppliers. However, establishing dominance was not enough.

The applicants still had to establish the required anti-competitive effect associated with the alleged exclusionary conduct. The Tribunal concluded that the evidence before it did not demonstrate the necessary anti-competitive effects. (SAFLII)

This demonstrates a central principle:

A dominant Eskom does not automatically violate the Competition Act whenever it excludes, terminates or changes a commercial relationship with a supplier. The competition effects and statutory requirements must still be established.

7. Essential-Facility Dimension

Electricity transmission and distribution networks can possess characteristics associated with essential facilities or natural-monopoly infrastructure.

The Competition Commission identifies denying competitors access to an essential facility as one potential form of abuse of dominance. (Compcom)

In the electricity sector, this raises questions concerning:

access to transmission networks;

connection to the grid;

non-discriminatory network access;

wheeling arrangements;

access charges;

balancing arrangements;

system operation;

technical connection standards.

Where a dominant infrastructure operator controls an indispensable facility, competition law may become relevant if access is withheld or provided on discriminatory or exclusionary terms.

However, competition-law analysis must be coordinated with sector-specific electricity regulation, including the statutory powers of the electricity regulator.

8. Excessive Pricing

Section 8 also regulates excessive pricing by dominant firms.

An excessive-price inquiry asks whether the dominant firm's price is substantially above the competitive level and whether the difference is unreasonable according to the statutory framework. (SAFLII)

The Competition Appeal Court's decision in Sasol Chemical Industries Ltd v Competition Commission is important for understanding this provision. The Court explained the statutory concept of an excessive price as one bearing no reasonable relation to the economic value of the relevant good or service and being higher than that value. It also recognised the economic and legal complexity of excessive-pricing cases. (SAFLII)

Applied to Eskom, an excessive-pricing analysis could potentially arise in a relevant market where Eskom exercises dominance, but electricity tariffs cannot simply be characterised as unlawful excessive pricing merely because they are high.

Electricity prices may reflect:

generation costs;

fuel costs;

financing costs;

network investments;

maintenance;

system balancing;

regulatory requirements;

reliability obligations;

environmental compliance.

Therefore, a legally sustainable excessive-pricing claim requires economic and statutory analysis rather than a simple comparison of tariff levels.

9. Exclusionary Conduct

Section 8 also addresses exclusionary behaviour.

Potential issues involving a dominant electricity utility could include:

refusing competitors access to necessary infrastructure;

discriminatory network treatment;

discriminatory procurement;

predatory pricing;

preferential arrangements;

foreclosure of downstream competitors;

tying or bundling;

margin squeezes.

The Competition Commission describes these categories as examples of conduct potentially constituting abuse of dominance. (Compcom)

The important qualification is that commercial disadvantage to a competitor is not automatically equivalent to harm to competition.

Competition law generally asks whether the conduct adversely affects the competitive process, market structure or consumers, according to the particular statutory provision.

10. Senwes — Broader Constitutional and Competition Principles

The Constitutional Court's decision in Competition Commission v Senwes Ltd [2012] ZACC 6 is not an Eskom case, but it provides important guidance on South African competition law.

The Court recognised that the Competition Act seeks to prevent practices that may eliminate competition and specifically prohibits abuse of dominance. It also connected competition regulation with the Act's broader objectives concerning economic participation and consumer welfare. (SAFLII)

The case is therefore useful when analysing Eskom because Eskom's public ownership does not place its commercial activities outside competition law.

The relevant question remains whether the conduct falls within the statutory competition framework.

11. Public Ownership Does Not Eliminate Competition-Law Scrutiny

Eskom is a state-owned enterprise, but state ownership does not automatically immunise its conduct from competition law.

The Mlonzi Tribunal decision expressly considered Eskom's constitutional and legislative status. The Tribunal noted Eskom's status as an organ of state while simultaneously recognising its obligations under competition law. (SAFLII)

This creates an important legal balance:

Public ownership may explain the regulatory and public-interest functions of Eskom, but it does not create a general exemption from competition-law principles.

At the same time, competition law must operate alongside:

electricity legislation;

regulatory tariff controls;

public-service obligations;

constitutional duties;

energy-transition policy;

grid reliability requirements.

12. Interaction Between Competition Law and Electricity Regulation

Eskom operates within a heavily regulated sector. Consequently, competition analysis may overlap with decisions made by the electricity regulator.

This produces questions such as:

Can competition authorities review conduct already regulated through electricity legislation?

Does regulatory approval of a tariff prevent competition-law scrutiny?

How should network-access rules interact with abuse-of-dominance principles?

Who should determine discriminatory access conditions?

How should competition law accommodate electricity-system reliability?

The Sasol Gas v Competition Commission litigation illustrates the broader jurisdictional difficulty that can arise when competition authorities investigate conduct within a regulated energy industry. The Competition Appeal Court considered the relationship between competition-law investigation and sectoral regulation by NERSA. (Law Library)

Although the case concerned Sasol rather than Eskom, its reasoning is useful when analysing competition-law jurisdiction in regulated energy markets.

13. Key Legal Principles Emerging From the Case Law

The Eskom-related jurisprudence can be reduced to several principles:

1. Dominance is not itself illegal

The Competition Act prohibits abuse of dominance, not dominance as such. (Compcom)

2. The relevant market must be carefully defined

FFS Refiners v Eskom demonstrates that a complainant cannot rely merely on Eskom's enormous electricity position while alleging abuse in an unrelated or inadequately defined market. (SAFLII)

3. Buyer power matters

Mlonzi v Eskom demonstrates that Eskom may possess substantial power as a purchaser, including monopsony power. (SAFLII)

4. Dominance must be connected to the alleged abuse

A high market share does not automatically establish that every subsequent commercial decision constitutes an abuse.

5. Competition harm requires evidence

In Mlonzi, the Tribunal found that the applicants had not demonstrated the necessary anti-competitive effects from Eskom's exclusion of the supplier. (SAFLII)

6. Sector regulation and competition law overlap

Electricity markets require coordination between competition authorities and sector-specific regulators.

14. Conclusion

The market dominance of Eskom under the South African Competition Act is best understood through the distinction between dominance and abuse of dominance.

Eskom's historically substantial position in electricity does not, by itself, constitute a contravention. Section 7 establishes the legal framework for determining dominance, while section 8 addresses abusive conduct. (SAFLII)

The most directly relevant cases demonstrate different dimensions of Eskom's power. FFS Refiners v Eskom emphasises the necessity of correctly defining the relevant market, while Mlonzi v Eskom demonstrates that Eskom can exercise substantial buyer/monopsony power in an input market. (SAFLII)

For energy-law purposes, the central issue is therefore not simply whether Eskom is dominant. The legally significant questions are where that dominance exists, what form its market power takes, what conduct is being challenged, what competitive effects result, and how competition law interacts with electricity-sector regulation.

Important Case Laws

FFS Refiners (Pty) Ltd v Eskom Holdings SOC Ltd & Others, 64/CR/SEP02 [2003] ZACT 9. (SAFLII)

Mlonzi and Another v Eskom Holdings SOC Ltd and Another, IR1360CT22 [2023] ZACT 61. (SAFLII)

Competition Commission v Senwes Ltd, CCT 61/11 [2012] ZACC 6. (SAFLII)

Sasol Chemical Industries Ltd v Competition Commission, 131/CAC/Jun14 [2015] ZACAC 4. (SAFLII)

Sasol Gas (Pty) Ltd v Competition Commission, 212/CAC/Apr 23 [2024] ZACAC 2. (Law Library)