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)
Creamer Media Senior Researcher and Deputy Editor Online
Other Competition Policy News
Recent Research Reports
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
This Week's Magazine
Energy analyst and EE Publishers MD Chris Yelland warned recently against excessive optimism regarding timescales for the proposed construction of new nuclear power plants (NPPs) in South Africa. He was speaking at a Nuclear Roundtable in Johannesburg. “I think we...
Malawi’s Lilongwe Water Board (LWB) is inviting eligible bidders to prequalify for the board’s efficiency improvement works, which will be implemented as part of the E24-million Lilongwe Water Resources Efficiency Programme. LWB CEO Alfonso Chikuni explains that...
CROATIA, AN EU MEMBER BUT NOT A TDCA MEMBER On July 1, 2013, Croatia officially became the twenty-eighth member of the European Union (EU). Despite Croatia’s accession into the EU, it is yet to become party to the Trade, Development and Cooperation Agreement (TDCA)...
The Council for Scientific and Industrial Research (CSIR) has announced that its new Inundu airborne electronics testing, evaluation and training pod had made its first test flight on September 10. The successful flight was undertaken from Lanseria International...
The Development Bank of Southern Africa (DBSA) – which disbursed a record R13-billion during 2015, from R12.7-billion in the prior year – remained optimistic that it could ramp-up loan disbursements to R25-billion a year by 2018 as it sought to give greater emphasis...