Competition Commission now profitable

Cape Town - The Competition Commission has experienced a dramatic increase in the number of companies blowing the whistle on anticompetitive and collusive behaviour. This has enabled it to collect fines worth over four times the annual budget allocated to it by government, the Competition Commission has told parliament.

"The commission also now officially a net profit organisation," said Shan Ramburuth, who appeared before parliament's economic development committee to present the commission's annual report.

Figures in the report confirm that the commission managed to pump the R487m it collected in the 2009/10 year in fines back into the fiscus. This is significantly more than the R80m government contributed to the commssion's  R128m budget in the same year.

Ramburuth said companies appeared far more willing to pay fines instead of "trying to take their chances in court". This, he said, was because the cases the commission pursued against companies were no longer taken as "empty threats".

By way of illustration, Ramburuth said that barring the R195m that was eventually recovered from Pioneer Foods for collusion, all of the R487m recovered in fines was obtained without court action.

"Companies like Sasol (fined R250m) are settling rather than trying to take their chances in court," said Ramburuth.

The corporate leniency programme, where companies are given indemnity from prosecution if they blow the whistle on a cartel they participate in, contributed directly to the commission's successes.

"We have seen very significant and dramatic increases in these applications (for leniency) for the year under review," said Ramburuth.  In the 2007/08 financial year, for example, there were only 10. But this increased to 13 the following year, and in the 2009/10 year there were 79.

Warning on tender rigging

When it comes to mergers in the 2009/10 year, the commission approved 190 of the 208 applications it received. This was lower than previous years when over 400 were usually approved, but Ramburuth explained that the commission was considering fewer applications since it had raised the threshold making it compulsory for companies to notify the commission of a merger. 

But the commission has sent out a warning to all companies operating in "priority" areas in which it is doing investigative work. The warning is that all mergers in these sectors would be taken note of, if not probed.

According to Ramburuth, the commission's biggest focus now is on bid rigging because this is costing government vast sums of money.

Aside from running training programmes for officials in charge of procurement processes, the commission and Treasury have collaborated to issue legal declarations all companies bidding for tenders have to sign.

This document would hold a company criminally liable, if it were found to be involved in rigging the tender process. 

 - Fin24.com