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Cape Town – South Africa’s Competition Act will undergo radical changes so that competition authorities can act against companies who perpetuate skewed ownership structures and over-consentration in certain markets in the economy.
Economic Development Minister Ebrahim Patel in his budget speech on Thursday said the proposed amendments will enable competition authorities to also act where big players in the market create barriers of entry to keep smaller players out.
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Patel told journalists earlier that he tabled the framework for the amendments to Cabinet and that it will bring about radical interventions. An advisory panel will give feedback on the proposals within the next six weeks.
The Economic Development Minister's announcement came three months after President Jacob Zuma first alluded to possible changes in competition laws in his State of the Nation Address in February this year. Zuma at the time said legislation needs to be amended to deal with over-concentration in certain parts of the economy.
Patel said on Thursday the current Competition Act is primarily concerned with anti-competitive effects, as opposed to rather helping to optimise the structure of markets.
He referred to legislation that was created in the US earlier which enabled authorities to act against big corporates that “kept out the smaller players”.
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Patel said the amendments proposed will “amplify and complement” the measures available to competition authorities to act against anti-competitive behaviour.
“The amendments will consider the concentration, ownership profile and structural impediments to entry or expansion in a market,” Patel said, “when that market is defined and assessed by the competition authorities in mergers or where anti-competitive conduct in that market is scrutinised in complaints referred to the Competition Tribunal for determination.
The proposed changes must empower the competition authorities to investigate matters when there are complaints from stakeholders who are “demonstrably” unable to overcome these barriers to entry.
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“Markets plagued by over-concentration and untransformed ownership will be identified, investigated and appropriate measures applied to remedy these market features,” Patel said.
These inquiries, and any remedies that result, will target the primary structural impediments to market entry and ownership by black South Africans.”
Patel said the proposed amendments will try to provide incentives to companies that develop relationships and adopt strategies that would help to change the market structure, reduce concentrations by encouraging entry of historically disadvantaged South Africans (particularly those who own small and medium-sized enterprises), reduce barriers to entry, and expand ownership to ensure that more enjoy substantive economic citizenship.
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