Jun 01, 2012
SA’s Competition Commission downgraded in global surveyBack
Construction|Africa|Resources|System|Africa|France|Germany|Japan|South Africa|United Kingdom|The Global Competition Review
© Reuse this
The survey, which was made public on Friday, tracked the performance of the world’s leading competition authorities.
South Africa’s Competition Commission’s greatest challenges last year came from the checks and balances of the country’s legal system, as a number of re-referrals and a spate of losses at appeal stage raised questions about the quality of its analysis and the scope of its investigative powers.
The commission lost six of seven appeals filed against it during the period. Several of these fell on procedural or technical grounds, as courts blocked the commission’s attempts to amend cases after filing them before the Competition Tribunal.
In the June case involving agri-businesses Senwes, which was accused of anti-competitive conduct, the Supreme Court of Appeal rejected the commission’s attempt to include new allegations of a margin squeeze after the complaint had been filed.
In August, the Competition Appeal Court ruled in favour of fertiliser companies Yara South Africa and Omnia, again refusing the commission’s right to amend the content of its complaint after submission.
The commission was challenging these decisions before the Constitutional Court, fighting for broader interpretation of its investigatory powers. The survey stated that although practitioners sympathised with the commission’s search for clarity, there were fears that a more permissive approach could give the commission excessive powers.
“Some suggest this balance is already beginning to tip in favour of the commission, marked by its increasingly ‘adversarial’ approach to mergers, particularly ones involving foreign entities,” it was said in the document.
Further, the commission was penalised for only blocking two of the 288 mergers filed in 2011. There was, however, a marked increase in the use of remedies, as 28 mergers were cleared with conditions compared to 11 in 2010.
“Although lawyers praise the ‘increased sophistication and complexity’ of merger reviews, they say the authority’s position can sometimes be unpredictable, labelling some of its recent decisions as ‘bizarre’,” the survey stated.
The authority attached extensive employment conditions to both the Walmart/Massmart and Kansai/Freeworld tie-ups, originally requiring Japanese-based Kansai to build a new car paint factory before acquiring Freeworld.
The survey suggested that conditions were becoming increasingly detached from the competition concerns lawyers seek to address, instead fulfilling government objectives linked to job creation and the protection of South African small and medium-sized enterprises.
However, the authority was praised for having 'pockets of excellence’ in its wider staff and general approachability. This was shadowed by leadership gaps in two divisions following the departure of head of mergers Maarten van Hoven and the head of the advocacy division.
The commission still struggled to retain staff, as its average two-year tenure was the shortest in the survey and over two-thirds of its 2011 staff joined that year.
Meanwhile, enforcement activity increased. It levelled a total of almost €50-million in nine cartel cases in key industries.
The survey further stated that there were signs of a “more mature and nuanced” approach to enforcement, with the authority willing to offer significant fine reductions for companies in exchange for compliance with investigations.
The fast-track settlement programme devised to deal with 204 leniency applications relating to a cartel in the construction industry was described as a “pragmatic” response to stretched resources.
The broader leniency programme gained validation in July when a court dismissed a cartelist’s claims that immunity granted to a co-conspirator was unlawful.
But some lawyers argue that leniency success should not distract from the commission’s overall “failure to start cartel investigations from scratch”. There were no dawn raids conducted in 2011, compared to four the previous year.
There remained concerns about the long-term impact of what many perceive to be an increasingly political commission, the survey stated.
Other competition authorities that were downgraded included the UK’s Office of Fair Trading that fell to four stars, following a dismal year for its cartel enforcement programme.
The European Commission’s Directorate General for Competition and the US Department of Justice’s antitrust division retained their five‐star ratings, while Germany’s Federal Cartel Office and France’s Competition Authority joined the elite five‐star competition agencies, motivated by their good performance in all areas of competition enforcement.
Japan’s Fair Trade Commission was also promoted to four‐and‐a‐half stars, in particular for its aggressive and successful cartel enforcement efforts and its good merger control work.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Other Competition Policy News
Article contains comments
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...