The Department of Trade and Industry (DTI) is boosting the capacity of the Competition Commission, after an Amendment Bill was passed by Parliament, which will give the commission the power to enforce criminal sanctions against perpetrators.

The department would also oversee the establishment of a company tribunal, as well as a financial reporting council to gear up for new company and consumer legislation, Trade and Industry Minister Mandisi Mpahlwa said on Thursday.

“We are putting in place systems, so that the implementation of the legislation will be a resounding success,” Mpahlwa said.

Last week, Parliament passed the Competition Amendment Bill, the Companies Bill as well as the Consumer Protection Bill.

The first of the three Bills, which related to the Competition Act, was aimed at strengthen the existing provisions to fight collusion and cartels, which undermined competitiveness, especially for downstream industries, Mpahlwa said.

The Bill introduced a criminal sanction regime against individuals found guilty of causing a firm to engage in price fixing, output restriction, market allocation, and collusive tendering. An individual may face up to ten-years imprisonment or pay a fine of R500 000, or both.

“This severe penalty serves as a signal that cartel activities will not be tolerated, and those involved in this harmful practice will be severely punished,” Mpahlwa stated.

He added that the department would embark on a process of developing protocol standards, which could be implemented alongside already-existing administrative actions, once a perpetrator was identified and charged.

The Companies Bill was aimed at overhauling the current Companies Act.

“The Bill is a complete departure to the philosophy that informed the Companies Act, and is a complete overhaul of the old regime in this area of the law.”

Mpahlwa said that the review of the current Act had been necessitated by outdated company legislations, globalisation, the advent of democracy, company scandals, the development of standards in the field of financial reporting, and increased market transparency.

The Bill emphasised simplification of company registration, and alleviated overregulation on companies, he added.

Under the new Bill, all companies would be required to prepare annual financial statements, however, certain categories of companies would be exempted from doing this. There would also be differing standards for different-sized businesses.

Business shareholders would also have to appoint an audit committee as a subcommittee of the board, and demand for a meeting would have to be supported by 10% of the voting rights. “This will, therefore, enhance minority protection, as they will be able to demand convening of meetings with ease, when they are aggrieved.”

The new Bill also gave trade unions the rights to access company’s financial statements for the purposes of exercising their rights for business rescue processes.

“However, such access to information will be given by the Commission under stricter conditions in order to respect business secrecy and confidential information,” Mpahlwa said.

Members of the public would also have access to company records, and in matters of dispute, the Tribunal would facilitate access to these records, without going through the pains of going to court.

The third piece of legislation passed on Friday related to consumer rights. The Consumer Protection Bill sought to create and promote an economic environment that supported and strengthened a culture of consumer rights, and responsibilities.

Controversially, the Bill also provided for a system of product liability, where any producer, distributor, or supplier would be held liable for any damage in the form of death, injury, loss, or damage to property and economic loss to the consumer, or a third party.

A National Consumer Commission would be established to investigate consumer complaints, while the National Consumer Tribunal would adjudicate over violations of the Consumer Protection Act. The courts would also adjudicate on all contractual matters, and would confirm consent orders concluded with suppliers.

“The Bill promotes consumer activism by providing for accreditation of consumer groups for lodging complaints on behalf of consumers, and provide for possible financial support for activities such as consumer advice, education, publications, research, and alternative dispute resolution through mediation or conciliation,” Mpahlwa said.

President Kgalema Motlanthe would have to sign these Bills into Acts before they would become effective.

The DTI expected that all three pieces of legislation would come into force by mid-2010.