Extract from Prof DV Cowen's 'A survey of the law relating to the control of monopoly in South Africa'
The South African Journal of Economics, June 1950, providing an historical survey of the South African
common law on the subject. It is reproduced verbatim and unedited. The article was written during
Prof Cowen's tenure as professor at the University of Cape Town (1946 to 1961). Prof Cowen is best
known for his work on negotiable instruments, and constitutional and environmental law. He passed
away on 16 April 2007 at the age of 89.
The late Prof DV Cowen
here are few subjects in law and economics where history has more to teach us than the story of
the attempt to control monopoly by legal sanctions. Certainly, the significance of the new Act
may best be judged when viewed against the background of an historical survey of the South African
common law on the subject. I proceed, therefore, to outline the main features of the history of this
branch of our law. 1
T
Monopoly as a crime
in Roman law
The oldest criminal enactment against monopolies which has
been preserved to the present day, the lex Julia de annona, relates
to the corn trade and probably dates from the time of Julius Caesar.
This law, wh ich is phrased in wide terms, imposed a heavy fine on
The South African common law relating to the control of monopoly
any person who alone, or in association with others, did any act
(un like the Statute law on the subject) has a history as old as the
which artificially increased the price of corn. 3
subject itself. Its starting-point is the Roman law, in which system,
But the effect of the lex Julia was not encouraging . The
2000 years ago, the first important attempt 1a was made to mitigate
Roman lawgiver was soon to find that monopoly grows easily and
the evils of monopoly by means of criminal sanctions.
dies hard. Liability to prosecution and a fine under the Imperial
To us in South Africa, the Roman law is naturally of particular
decree did not prevent the practice from gradually extending to
interest. Firstly, because it forms a major part of our Roman-Dutch
the whole of the trade in foodstuffs and, indeed, to most other
common law. Secondly, because the Roman legislation against
articles in daily use. Records show that numerous Imperial decrees
monopolies is one of the most sustained efforts in history to combat
were promulgated from time to time to deal with the situation .
monopoly by means of the criminal law, and we may learn much
Criminal sanctions, which in the first instance had been directed
about the efficacy of this particular means of controlling monopoly
against corn monopolies, were later extended to monopolies of
from the experience of the Romans.
It was a common practice for traders in ancient times to buy up
provisions generally, and then to monopolies of all kinds of goods
- ne dardanarii u/lius mercies sint. 4 Moreover, the penalties for the
large quantities of provisions before they came into the open market
offence were increased. Thus, besides the fine provided for by the
so as later, at an opportune time, to command a price virtually free
lex Juli de annona, which remained in force, subsequent decrees
introduced the penalties of withdrawal of the right to trade and
even deportation. 5
from competition . In short, the ancients were fully alive to the use
that could be made of the 'contrived scarcity' as a means of raising
prices; and there is ample evidence that this was the chief evil which
the Romans sought to eliminate. 2
38
advocate
August 2007
Despite these stringent measures, however, the effort of the law
to keep pace with the growth of the movement was largely in
vain. Study of the literature of the time, for example the works of
achieved . It must be answered, I think, that as an experiment in the'
Pliny, 6 reveals that popular complaints continued to be addressed to
efficacy of controlling monopoly by means of the criminal law, it was
the Roman Senate about the burden of numerous and oppressive
singularly ineffective. Right from the beginning, as we have seen,
monopolies. Legislators were, in fact, becoming painfully aware that
the laws against monopoly proved almost impossible to enforce,
it is one thing to provide penalties for the practice of monopoly, quite
and in later years they were largely stultified by the grant of Imperial
another to procure a criminal conviction.
The most serious obstacle, however, to the working of the criminal
privileges . It is true that the Edict of leno condemned the grant
of Imperial privileges, and revoked those which had been granted
laws against monopoly ultimately came from the state. During the
in the past, but so far from matters improving, they continued to
economic crisis which threatened the existence of the Western Empire
deteriorate. Later Emperors, including Justinian, circumvented the law
in the third century AD, the Emperors themselves sought to replenish
by creating state-monopolies under the management of civil servants,
their impoverished treasuries by the sale of monopoly rights. The
who took the place of the private monopolists who had formerly been
result was that many of the most important branches of industry
granted Imperial privileges. The effects felt by the people appear to
and trade throughout the Empire came to be organised on a state­
have been even worse than before.
protected monopolistic basis.7 The anti-monopoly laws were virtually
paralysed; for it was obviously paradoxical, at least, to have such laws
when the state itself obtained a considerable part of its revenue from
the sale of monopoly rights . It is melancholy to reflect, in passing,
Monopoly as a crime in the
Roman-Dutch law
that state policy of practising one thing and preaching another about
If we wish to trace the subsequent history of leno's Edict after the
monopoly is not unknown in modern times.
disruption of the Roman Empire, we must look to the European
By the beginning of the fourth century, the evils of monopoly had
systems which, centuries later, 'received' the Roman law. Among
begun to weigh so seriously on the public, that Diocletian, in 301 AD,
these, the system which directly concerns us is the Roman-Dutch law
attempted to protect consumers by issuing an Edict on 'Price-Control',
of Holland .
which laid down a system of maximum prices, and made violation of
the tarift' punishable by death. 8 Buyers in the black market, no less
After the fall of the Roman Empire, many centuries were to elapse
before clear trends in the economic and legal life of Europe again
than sellers, were subjected to the same punishment. But the Edict,
became discernible. Gradually, however, over the centuries, there
in entering the notoriously difficult field of price-control, proved to be
was a revival of organised commerce and, with it, a recurrence of
over-venturesome. Even the death penalty was ineffectual in the face
monopoly. By the 16th century, the effects of monopoly had become
of organised black-marketing, and the Edict was repealed immediately
so acute, and the reaction of wide circles of public opinion against it,
after Diocletian's abdication in 305 AD.
so vigorous, that the Emperor Charles V - despot that he was - felt
The public was now again very largely at the mercy of the
monopolist, and so it went on until, in the year 483 AD, the Emperor
leno issued his famous Edict against monopolies.9 The Edict of leno
himself constrained against his own interests to introduce legislation
against the practice.
On 4 October 1540 Charles V promulgated an Edict for the
is assuredly the high water mark of anti-monopolistic legislation. It
Netherlands which, after a thousand years, virtually re-enacted the
condemned the exercise of monopoly power without any reservation
substance of the Roman law against monopolies. Paragraph 7 of the
whatsoever, and imposed the penalties of heavy fines, forfeiture
Edict reads as follows:
of property and condemnation to exile. No attempt was made to
'Also to prevent from henceforth on the damage proceedings
distinguish between the lawful and the unlawful exercise of monopoly
from monopolies and improper contracts which many merchants
power. Not only did the Edict rescind monopoly rights where they
and traders make and use in our land to the detriment of other
had already been granted by previous Emperors, but it also outlawed
good and righteous merchants and traders and against the common
the grant of Imperial privileges in the future.
welfare; so have we ordered and decreed, and do order and decree,
leno's Edict is particularly significant, moreover, because it is
that no merchant, trader, or anyone else do promote the making of
probably the first piece of legislation in history which contains a
contracts, pacts or agreements smacking of monopoly or prejudicial
provision bearing closely upon the modern practice of resale price
to the common welfare, such as to buy all the commodities of any
maintenance. Thus, one of the practices which the Edict specifically
sort to keep them amongst themselves and afterwards to sell at
prohibits and penalises is 'an agreement among persons that
excessive prices, or other similar practice, under pain of confiscation
merchandise may not be sold at a price less than they have agreed
of the goods and commodities so bought, and in addition of arbitrary
punishment.' 12
upon among themselves' . 10 The language of the Edict clearly seems
wide enough to embrace an agreement between a seller (producer)
and a buyer (distributor) that the latter shall not resell below an
agreed price, which, as we shall see later, is the basis of all modern
schemes for resale price maintenance. 11
After the promulgation of leno's Edict, there was no fresh Roman
This is the main pillar of the Roman-Dutch law against
monopolies. 13
The dominant feature of this branch of the Roman-Dutch law is
that it clung to the Roman faith in the efficacy of criminal sanctions
as a means of preventing monopoly. Indeed, broadly speaking, it
legislation on the subject of monopolies, and when finally, during the
might fairly be said that the Roman-Dutch law against monopolies
years 529 to 534 AD, Justinian codified the Roman law, he did not
shows basically the same characteristics as does the Roman law which
more than incorporate leno's Edict and also the earlier lex Julia de
inspired it. 14
annona as the main props of his legislation on the subject.
Now, when Justinian codified the Roman law, the days of the
The Edict of Charles V unfortunately did not contain a definition
of 'contracts, pacts or agreements smacking of monopoly'. It is
Empire were drawing to a close and Europe was soon to enter the
plain, however, that the Dutch jurists, in interpreting the Edict, and
Dark Ages . We may, therefore, pause at this stage to look back upon
in establishing the law of their day, utilised the Roman law - as the
the Roman legislation against monopolies and ask ourselves what it
Emperor Charles had done himself.
advocate
August 2007
39
FORUM
The practice of cornering or forestall ing in the trade of foodstuffs
- against which the lex Julia de annona and Digest 47.11.1.6 were
legislation proved qu ite inadequate to cope w it h the problems
of monopoly. Econom ic power means pol it ical power, and the
directed - was a punishable crime in the Roman -Dutch law under
enormous wealth and influence of the si xteenth and seventeenth
the specific name of the crimen fraudatae annonae .15 This appears
century monopolists proved too powerfu l to suppress in the criminal
quite clearly from the accounts of the crime given by leading
Courts. In fact, monopoly in the Roman-Dutch law appears to have
Roman-Dutch authorities. Thus, Van Leeuwen mentions as a specific
been a crime in name only: vox et praeterea nihil.
example of the offence, the conduct of persons who buy up and
As early as 1552, Damhouder, while telling us that 'there is
then withhold supplies, thereby creating a scarcity and consequent
another detestable crime called monopoly', add that, although it
dearness of prices, 16 and in his Rooms-Hol/ands Recht, he deals with
is often committed, it goes 'almost unpunished'. 25 It is true that
the subject as follows: 'the causing of want, through the buying up of
throughout the 17th century most of the recognised authorities on
provisions done mala fide in prejudice of the community, is punished
with banishment and the confiscation of the property' .1 7 Similarly,
the Roman-Dutch law included monopoly in their enumeration of
criminal offences, 26 but it is clear that by
Johannes Voet speaks of raising the
price of supplies by buying them up and
withholding them from the market, 18
and there are passages in Damhouder's
chapter on monopoly19 which actually
read like an exposition of the early
the end of the 17th century the criminal
[Ut is fair to say that the Roman-
law on the subject had, in practice,
Dutch jurists had few illusions about
completely fallen into desuetude in
the economic nature of monopoly
Holland. Thus Johannes Voet, writing
in 1698, after briefly describing the
power and the ways in which it may be
English law on the subject of forestalling .
'The crime of monopoly', he says, 'is
crime of monopoly and the penalties
secured. They plainly discerned that
therefor, with reference to the Roman
committed by any person who purchases
monopoly power is power to control
law and the Placaat of 1540, says: 'But
the whole supply of foodstuffs in the
market in order later, at his discretion, to
sell it at a greater price; or who gradually
the market by excluding effective
competition. Moreover, they perceived
buys up n~cessary articles of daily use
with clearness that one of the most
in order to profiteer out of them later;
potent means of obtaining monopoly
or who prevents provisions and other
commodities from reaching the open
market' .20
It seems clear, too, that agreements
among traders not to sell below a
power is for merchants in combination
to agree not to compete, and they
recognised too, that once monopoly
nowadays in our State, which is strongly
in favour of free commerce, such
penalties are hardly any longer resorted
to in practice, however true it may be
that the whole State may at times suffer
form the mean greed of certain parties,
and although individuals may groan
under the burden of excessive prices'. 27
Van Zurck, writing in 1711, tells us in
his Codex Batavus, that there was no
power has been attained, it commonly
single instance on record in Holland
prohibited and punishable under Zeno's
seeks to achieve its ends by the method
of a conviction for monopoly. And
Ed ict, were also contrary to the criminal
of the 'contrived scarcity'.
mutually agreed price, which were
law of Holland . Van Leeuwen, for
example, quoting the Edict of Zeno,
specifically refers to 'those who by concluding unlawful agreements
conspire or resolve that merchandise shall not be sold at a price less
than that fixed by them' .21 Moreover, there is evidence that the
provisions of the Edict on this point were adopted by other European
countries which were influenced by the Roman law. Thus, the
Gerhard de Haas, in a note appended
to his edition of Van Leeuwen's Censura
Forensic, published in 1741, after
referring to the above cited passages in Voet and Van Zurck, curtly
dismisses the subject of monopoly in one sentence as follows : 'These
authors make it plain that monopoly is not punished in our land .'28
In these circumstances, it is difficult to resist the conclusion that the
provisions of the Roman-Dutch law, insofar as they made monopoly
eminent Italian Jurist, Tiberius Decianus, who is one of the clearest
a punishable crime, were a dead letter in Holland by the end of the
and most informative of the mediaeval authorities on monopoly,
18th century.
writing in 1591,22 tells us that the clauses of Zeno's Edict were in
The question whether the criminal provisions of the Roman-Dutch
force in the Italian States, and, quoting the language of the Edict, he
law on monopoly are still in force in South Africa need not detain
specifically cites an agreement among traders not to undersell as an
example of a criminal monopoly. 23
in South Africa for monopoly under the old law. Moreover, as
On the whole, it is fair to say that the Roman-Dutch jurists had
few illusions about the economic nature of monopoly power and
us long . There is no record of there ever having been a prosecution
far as I am aware, the only South African decision which contains
any reference to the old Roman-Dutch law on the subject is Tothill
the ways in wh ich it may be secured . They plainly discerned that
v Gordon ,29 which, however, was a civil action, and so the court
monopoly power is power to control the market by excluding
did not deal with the question whether a criminal conviction was
effective competition . Moreover, they perceived with clearness
still possible in South Africa under the old law. There can be little
that one of the most potent means of obtaining monopoly power
doubt, in my opinion, that the criminal provisions of the Roman and
is for merchants in combination to agree not to compete, and they
Roman-Dutch law must now be regarded as having been abrogated
recognised too, that once monopoly power has been attained, it
by disuse. This conclusion is stated by Gane J in the index to his
commonly seeks to achieve its ends by the method of the 'contrived
translation of Huber's Jurisprudence of My Time, where he says
scarcity' . Van Leeuwen, for example, in his Rooms-Hol/ands Recht,
tersely of monopoly, 'not a crime in South Africa' 3D and it is also the
significantly speaks of 'gemaakte dierte' .24
view expressed by Mr Robin Stratford KC, in a short but useful note
We may now ask what did the Roman-Dutch law against
monopoly achieve, was it any more effective than its Roman
prototype, and has it survived? More particularly, does it still obtain
in South Africa? The answer is plain. The Roman-Dutch penal
40
advocate
August 2007
annexed to the recent Report of the Distribution Costs Commission. 31
Finally, it is significant that the subject is not even mentioned in
the leading South African work on criminal law by Gardiner and
Lansdown .32
a reference to the relevant Dutch Placaats, as noted by Zypaeus, and to
Endnotes
the observation that inasmuch as special penalties are laid down in the
Somewhat surprisingly this is a comparatively unexplored field. I hope,
Placaats, the penalties provided for by the Roman law must be regarded
however, in the near future to publish a book dealing with the subject more
as having been abolished. But nowhere does he suggest that the specific
comprehensively and with fuller documentation than is possible within the
practices which were regarded as criminal monopolies in Roman law were
limits of this article.
la not regarded as monopolies in the Roman-Dutch law. On the contrary,
there is much authority that they were so regarded . There does, however,
There is some evidence in lay literature of the existence of anti-monopolistic
legislation in Athens as early as the 4th century BC. Thus, Lysias, in his
seem to be some room for difference of opinion on the question whether
speech against the corn-dealers (Or XXII 5) refers to a law which sought
the Roman-Dutch law condemned monopoly quite to uncompromisingly as
to prevent monopolies by prohibiting corn-dealers from buying up more
did the Roman law; cf the use of the word 'excessive' in par 7 of the Edict
than 50 measures of corn at a time. According to Lysias, the penalty for
of Charles V, supra, and Grotius De Jure Belli et Pacis 2, 12, 16. It is not
an offence against this law was death . Cf Aristotle (Politics 1.11.12) who
possible, however, to elaborate this topic within the limits of this survey.
refers to the banishment of the banker of Syracuse. Our knowledge of
15 early Greek legislation on the subject is, however, too fragmentary for
This term was in general use in the Middle Ages and, among the Dutch
jurists, it was employed by A Matthaeus 11 in his book De Criminibus
useful discussion.
published in 1664, and by Van Leeuwen in his Censura Foresis (1662) 5.9 .
The monopolistic trade practices aimed at by the early Roman legislation
16 are commonly regarded as being the counterpart of the offences of fore­
stalling, ingrossing and regrating, which until the middle of the 19th cen­
tury were punishable under the English Criminal Law. Colquhoun Roman
Censura Forensis 5.9: 'qui species coemptas supprimunt, flagellant, ex
varitate affectantes caritatem'.
17 4.33 .17, Kotze's translation 1st ed vol 11 p 268.
In Tothill v Gordon
Civil Law para 2409; Stevens History of Criminal Law in England vol 1
1930 WLD 99 at p 111, Van Pittius J observed that it was 'rather curious'
pp 23-25 .
that Van Leeuwen in this passage only mentions foodstuffs . It is quite clear,
however, that the Roman-Dutch law was not aimed only at monopolistic
The law is set forth in Digest 48.12.1: 'Lege Julia de annona poena sta­
practices in the food and provisions trade . Thus, the Placaat of Charles
tuitur adversus sum, qui contra annonam fecerit societatemve coierit,
quo annona carior flat.' See generally, Mommsen Rbmisches Strafrecht
pp 851-852, Colquhoun Roman Civil Law vol III para 2409 says: 'The Lex
Julia de annona was directed against those who kept up the price of corn
by arti}icial means'. See also Hunter Roman Law 2nd ed p 1067. Livy 38
V expressly refers to 'commodities of any sort' . It would seem that Van
Leeuwen was merely stressing, by way of example, the trade in which the
practice was most rife.
18 XXXV 5. refers to the imposition of penalties upon hoarders of corn as early
as 189 BC, but the text of the relevant law has not been preserved.
4
Ad Pandectas 48.12: 'Species coemptas supprimendo quo ea fiat
carior.'
19 Joost van Damhouder is one of the earliest and best known authorities on
Digest 47. 11.1.6. Dardanariatus was a technical term of the Roman Law
the Criminal law of the Netherlands to write on the subject. His Praxis
used to designate monopolistic practices, especially in the corn trade. See
Rerum Criminalium appeared in 1552 .
Hitzig's article on 'Dardanariatus' in Pauly-Wissowa Real-Encyclopadie vol
20 Praxis Rerum Criminalium Ch 132: 'Monopolium committitur: Qui
comestibilia omnia in foro emunt ut ea post carius pro suo arbitratu
divendant.
'Qui quavis usibus nostris necessaria passim emunt, ut pro suo arbri­
tratu postea divendant.
21 Censura Forensis 5.9: 'Hi porro qui illicitis habitis conventionibus con­
jurant, aut paciscuntur ut species diversorum corporum negotiationis,
non minoris, quam inter se statuerint, venundentur.'
22 Tractatus Criminalis, De monopoliis Lib VII Ch XXI.
23 Op cit p 188: 'Item qui illicitis conventionibus conjurant, aut paciscun­
tur, ut species diversorum corporum negotionis non minoris quam
inter se convenerint venundentur. '
4 p 2154.
Digest 47. 11.1.6.
Naturalis Historia (77 AD) Bk VIII Ch XXXVII.
See the articles by Gummarus on 'Industrie und Handel' in Pauly­
'Qui impediunt ne victualia aut aliae res ad forum perveniebantur.'
Wissowa Real-Encyc/opadie s.v. Staatsmonopole pp 1518-1519, and by
Hetchelheim on Monopole op cit vol 16 pp 147-199.
The best modern edition of the Edict, with an English translation, is that
by ER Graser in Tenney Frank's Economic Survey of Ancient Rome vol
5 pp 307-421. In promulgating the Edict, Diocletian appears to have had
more than one object in view. See, generally, BIOmner Der Maximaltariff
des Diokletian (1893) Berlin and H Michell 'The Edict of Diocletian' (1947)
Canadian Journal of Economics and Political Science p 1 et seq. The
rise in prices which Diocletian hoped to curb by his Edict was intensified,
it would seem, by the devaluation of silvered bronze coins which followed
24 Bk IV Ch 23,17, which Kotze op cit p 268, translates as 'The causing of
want.'
upon the Emperor's reform of the coinage.
10
The Edict is set forth in code 4.59 .
25 Op cit.
The relevant portion of the Edict reads : 'We command that persons shall
26 For example Christinaeus Decisiones, (1623) 3 . 98.2.27; Zypaeus
Notitia Juris Gelgici (1635) 1665 ed pp 200-201; A Matthaeus 11
De Criminibus (1644) p 628; Van Leeuwen Censura Forensis (1662)
5.9. Rooms-Hollands Recht (1664),4.33.17; Huber Hedendaegsche
Rechtsgeleerdheyt (1686) 6.18.1 . See also Hollandsche Consultatien
not, by concluding unlawful agreements, conspire or resolve that different
kinds of merchandise may not be sold at a price less than they may have
agreed among themselves' . 'Jubemus, ... neve quis illicitis habitis
conventionibus coniuraret aut pacisceretur, ut species diversorum
, corporum negotiationis non minoris, quam inter se statuerint,
venundentur'.
11 Cf Piotrowski Cartels and Trusts (1933) London pp 114, 119, 123.
12 The Dutch text is set forth in Vol 1 of the Groot Placaat Boek p 315 .
13 In addition to the Placaat of 1540, Zypaeus
vol 4 Cons 242 which contains an opinion on the subject by B (not S) van
Leeuwen .
27 Commentarius ad Pendectas 48.12 in fin: 'Quales tamen poenae nunc
in nostra republica, libertati commerciorum summopere favente, viz
amplius usu receptae sunt, utcunque sordida quorundam avaritia
quandoque tota prematur respublica, singulique sub pretil intensie
onere gemant.'
28 p 555 note 2.
(Notitia Juris Belgici (1635) p
200) refers to other Placaats on the subject promulgated in the Netherlands
in the years 1515,1531,1573,1575,1587,1597,1598,1599, 1614and
1627.
14 The bearing of the Placaats and the status of the Roman law on the subject
in Holland is elucidated in an instructive passage in Groenewegen's De
Legibus Abrogatis, a work of high authority published in 1649, which was
specifically devoted to a consideration of the extent to which the Roman
law obtained in Holland in the 17th century. In dealing with the Roman
law of monopoly, Groenewegen (AD Cod 4 .59) confines his comment to
29 (1930) WLD 99.
30 Volume 2, p 512 .
31 U.B. 28 of 1947; Annexure 16 p 74.
32 Nor is the subject referred to in the recently published work on Strafreg by
Fa1
De Wet and Swanepoel.
advocate
August 2007
41