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BUSA: Yes to Competition Amendment Bill, but keep watchdogs in check

Aug 30 2018 21:42
Khulekani Magubane

Business Unity South Africa (BUSA) has told Parliament it welcomes the Competition Amendment Bill, as long as the Competition Commission and the Competition Tribunal can keep each other's powers in check. 

Unilateral findings against companies must be avoided, BUSA warned. 

Economic Development Minister Ebrahim Patel revealed the bill to South Africa in July. It was presented as clearly outlining uncompetitive behaviour by companies, allowing for sanctions to be imposed on first-time offenders.

BUSA said it welcomed the bill, but had suggestions on the terms under which the Competition Tribunal and Competition Commissions should be able to conduct inquiries or make findings on companies.

BUSA also had recommendations regarding the definition of concentration in markets, and the power competition watchdogs had to sanction first time offenders.

The amendment bill additionally closes loopholes that major companies from outside of South Africa may use to undercut smaller businesses.

These include predatory pricing, where dominant firms charge artificially low prices at the expense of competitors, only to raise costs once competition is eradicated.

It also seeks to combat market squeeze, which occurs when major companies sell materials throughout the production chain at a higher price to competitors than they do to their own firms.

Regarding market inquiries, BUSA proposed in their submission that no binding remedy may be imposed without a finding by the Commission and confirmation from the Competition Tribunal.

The organisation said a finding should be subject to appeal.

"Furthermore, the trigger for a market inquiry should be on the basis of credible information. 

"A market inquiry should be in two stages; an initial fact-finding exercise through requests for input, followed by a full-blown market inquiry on the basis of anti-competitive features made visible in the fact-finding exercise," said BUSA’s submission.

A key concern for BUSA, the submission said, was the initial diagnosis of the problem of concentration in key strategic markets.

"BUSA understands the motivation to address concentration to be unchanged since this initial version of the bill.

"However, analysis by BUSA members shows very different results. Levels of concentration are often much less than assumed," BUSA said.

Removing yellow cards

Regarding the bill's stance on "removing the yellow card regime" and imposing penalties on first time anti-competitive offenders, BUSA said this was necessary for borderline conduct to be scrutinised and oversight strengthened, but that it should be differentiated from clearly anti-competitive behaviour.

"In BUSA’s view, a viable middle ground would be to do away with yellow card protection once the Competition Tribunal or Competition Appeal Court has issued a final judgment that particular conduct is prohibited," said BUSA.

BUSA said it recognised the importance of finding the right balance between addressing anti-competitive practices and behaviour, markets that are exclusionary, and stimulating competitive practices to enable investment and growth in the economy.

Despite "largely endorsing" the bill's objectives, BUSA said, it was concerned that the "balance may be disproportionately weighed against ease of doing business". 

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