Competition law in the spotlight

Cape Town - Parliament's committee on trade and industry has refused to change the Competition Amendment Bill, even though President Kgalema Motlanthe has sent it back for reconsideration.

The president said that the legal advice he had was that the bill might not pass constitutional muster because one clause of it seemed to reverse the onus of proof on a company director accused of causing or acquiescing in the action of a company which broke the competition rules.

The bill, which introduces criminal sanctions for guilty directors, says that prima facie proof that the firm engaged in prohibited practices is to be seen in a consent order or a finding by the Tribunal or Appeal Court that the firm did so.

The consent order is a form of plea bargain whereby the firm admits anti-competitive behaviour, in the hope and expectation of getting more lenient treatment.

The argument against the clause is that it breaches the constitutional right to silence, and requires the accused director to prove his innocence.

Johan Strydom, legal adviser to the Department of Trade and Industry, told the committee on Wednesday that the first draft of the bill said that such a consent order or finding should be regarded as "conclusive" proof, but in a later amendment this was softened to "prima facie", which at least allows some argument.

He added however that the only way to deal with constitutional qualms about the clause that upset the President would be to delete it altogether.

The orders and findings would still be admissible, he said, but they would have no evidential value. "The state would have to start from scratch," he said.

"The state will be in a cumbersome and onerous situation."

The members of the committee insisted that they did not want to put unnecessary obstacles in the way of the prosecution, as the criminalisation of directors' conduct was a prime motive for passage of the bill.

In his letter to the speaker of the national assembly, Gwen Mahlangu-Nkabinde, the president also presented the objection which had been raised by one of the interested parties - that there had not been an opportunity given for further hearings on the bill after it had been amended by the National Council of the Provinces.

Strydom, who was backed up by the state law advisers, explained to members of the committee that there was no requirement that objectors to the bill should be given another chance to make their objections after the bill was amended.

Peter Leon of Webber Wentzel, acting on behalf of MasterCard, presented evidence to the NCOP which claimed that the MasterCard system would be badly affected by the rules concerning "complex monopolies". As a result of his representations that section was amended, but not enough to suit him, and as a result he wanted to make further submissions.

When the council refused to let him, he wrote to the president asking him to refuse to sign the bill into law.

Because the request, which was included in the president's letter, as a matter of procedure the matter will now also have to be referred to the NCOP.

But after that is done the bill will be returned to the President. He can either sign it, despite his legal advice, or can refer it himself to the Constitutional Court for a decision.

- I-Net Bridge