Relevant legal principles
[57] In any free enterprise economic system or, as it is usually called, "free market economy", it is generally
accepted that entrepreneurs and participants in the commercial sphere are free to compete with one another.
See in general LAWSA vol 2 (reissue) paragraph 376; HJO van Heerden and J Neethling Unlawful Competition
(1995) 13 (hereinafter referred to as "LAWSA 2r" and "Van Heerden & Neethling" respectively). Such
competition is usually directed at achieving the same end, which includes seeking or attracting the custom of
the same potential clients. See Payen Components SA Ltd v Bovic Gaskets CC 1994 (2) SA 464 (W) at 473GH
(per Van Zyl J):
"The law relating to unlawful or unfair competition is directed principally at regulating the relationships between
business competitors . . . Such competition is a characteristic, and indeed the natural outflow, of the capitalist free
economy which pertains in South Africa and in other Western countries. The nature of the competition is that the
competitors have the same or similar goals, chief among which, at least in the field of trade and industry, is to
attract the custom of the same clients or groups of clients" . . .
[58] Competition in this sense constitutes an essential element of commercial activity, as stated by Van Heerden JA
in Taylor & Horne (Pty) Ltd v Dentall (Pty) Ltd 1991 (1) SA 412 (A) at 421J:
"It has often been said that competition is the lifeblood of commerce. It is the availability of the same, or similar,
products from more than one source that results in the public paying a reasonable price therefor. Hence
competition as such cannot be unlawful, no matter to what extent it injures the custom built up by a trader who
first marketed a particular product or first ventured into a particular sphere of commerce. But, as was said in Dun
and Bradstreet (Pty) Ltd v SA Merchants Combined Credit Bureau (Cape) (Pty) Ltd 1968 (1) SA 209 (C) at 216,
competition may be rendered unlawful by the manner in which a competitor conducts his trade etc."
Page 398 of [2005] 2 All SA 382 (C)
[59] In this regard competition is, generally speaking, said to be of benefit to all interested parties, including the
national interest, as stated by Page J in Silver Crystal Trading (Pty) Ltd v Namibia Diamond Corporation (Pty) Ltd
1983 (4) SA 884 (D) at 888A:
"[F]or it is not the function of the Courts to stifle healthy competition which, in a free enterprise society, can only
redound to the benefit of the public."
[60] This does not mean that business competitors are at large to do exactly as they please. It is to be expected,
of course, that strong competitors who, by virtue of their powerful financial or human resources, may be able
to compete on an unequal basis, will have little or no difficulty in eliminating weaker competitors. This does
not, however, entitle them to strive for victory by whatever means available. If their conduct in doing so
should be monopolistic or otherwise regarded as unjust, unfair, dishonest or unconscionable, it may
constitute unlawful competition. See the useful introductory discussion, with full reference to sources and the
relevant jurisprudence, in LAWSA 2r par 398.
[61] Van Heerden & Neethling at 34 aptly describe the nature and ambit of unlawful competition in the following
passage (at 34):
"[I]t is clear that the competitive relationship brings about a struggle for the favour of the client, a struggle in
which the benefit that the one obtains, finds its correlate in the prejudice or potential prejudice that the other
suffers. Where the interests of the different competitors in this struggle are in direct opposition, it is selfevident
that a conflict of interests will constantly be present. Accordingly it is the function of the law to identify and
recognise the interests involved in the competitive struggle, to delimit them in relation to each other, and to
indicate, firstly, under which circumstances such interests will be protected against infringement (that is, when the
impairment of a competitor's interest(s) will be delictually wrongful and thus constitute unlawful competition) and,
secondly, how such a disturbance of the harmonious balance of interests may be restored.
At first glance the concept of unlawful competition is selfexplanatory: it encompasses any act which is directed at
gaining an advantage over and/or prejudicing a competitor(s) in the competitive struggle and which is censured by
law. In the first instance this means that there can be no question of unlawful competition without competition.
Secondly it implies that a great variety of acts qualifying as competitive conduct which may for different reasons
be wrongful, can be classified as species of the genus unlawful competition . . .
It is, however, possible to give the concept of unlawful competition a more restricted meaning and that is indeed
the position in a few legal systems. As will be demonstrated, this concept has a particular or distinctive connotation
in contemporary legal thinking, namely that private law protection against unlawful competition can be based
exclusively on the goodwill ("werfkrag") of a business enterprise. Moreover the common law bases of the South
African law of delict are wide enough to fully accommodate unlawful competition in this sense."
On the recognition of Aquilian liability for unlawful competition see the discussion in Van Heerden & Neethling at
6 2 6 5 . S e e a l s o Matthews and others v Young 1 9 2 2 A D 4 9 2 a t 5 0 7 , Geary & Son (Pty) Ltd v Gove
1964 (1) SA 434 (A) at 440H441B and the full discussion of Van Dijkhorst J in Atlas Organic Fertilizers (Pty) Ltd
v Pikkewyn Ghwano (Pty) Ltd and others 1981 (2) SA 173 (T) at 179B186D.
Page 399 of [2005] 2 All SA 382 (C)
[62] One of the prime examples of unlawful competition in our law is passing off another's product, goods or
business as one's own. As Van Dijkhorst J put it in Lorimar Productions Inc and others v Sterling Clothing
Manufacturers (Pty) Ltd; Lorimar Productions Inc and others v OK Hyperama Ltd and others; Lorimar Productions
Inc and others v Dallas Restaurant 1981 (3) SA 1129 (T) at 1138A, passingoff "is but a species of the delict
unlawful competition".
[63] In order to succeed in an action based on passingoff as a form of unlawful competition, the plaintiff must
prove that the defendant committed an unlawful act in the sense of a breach of the plaintiff's goodwill. This