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Patel: Competition amendments do not seek to 'out-trump Trump'

Jul 17 2018 19:30
Khulekani Magubane

Cape Town – Minister of Economic Development Ebrahim Patel has said South Africa would not resort to weaponising its competition regulation regime to punish other countries for making trade and tariff decisions which could harm the country's economy.

Patel was speaking at a briefing in Parliament on Tuesday afternoon about amendments to the Competition Amendment Bill. 

The minister was answering a question related to one of the amendments, a clause introduced into the Bill which could empower the president to intervene in an acquisition or merger involving a foreign entity if it had implications for national security.

Patel made his remarks as trade war tensions between the US and China continue to escalate with reciprocal tariffs.  

US President Donald Trump has adopted an “America first” mantra in trade with other world leaders, with some leaders in the global community viewing this as brinkmanship, or unnecessarily aggressive.

In a tongue-in-cheek comment, Patel told reporters South Africa had no desire or intention to use the national security clause or any other part of its competition regulation regime as a bargaining chip or a stick with which to beat countries that antagonise SA.

“Do we wish to out-trump Trump? Would we dare? On a serious note, to use national security as a trade weapon does not make sense. We went through a careful selection process when developing this policy. We have limited the president’s consideration to a finite list that must have relevance to national security and left it there,” said Patel.

Patel said the national security clause in the Bill would be balanced out by the need for national security to take the public interest into consideration and that the president could not scrap mergers and acquisitions unilaterally.

He said it would be unwise of SA to create an impression that it had a punitive regime in competition regulation, as many parts of the world already view the country’s market as “highly concentrated and sewn up”.

“We have checks and balances in our legislation. Authorities are responsible in different ways to the executive. The [Competition] Tribunal and the [Competition] Commission each have institutional independence, which is important. And arbitrary and capricious system will be punished by the market,” Patel said.

Competition Tribunal chair Norman Manoim, also speaking at the briefing, said any final decision on whether a merger or acquisition would impact national security would not be made by the competition authorities. If the president made such a decision, the Presidency would have to gazette such a decision.

Patel said when a market inquiry is set up, all parties will be able to make representations on the competition imperatives therein to the Commission. Thereafter, the findings of a market inquiry can be appealed at the Tribunal.

“There is currently no provision in law for an executive to consider national security when deciding on mergers and acquisitions. It provides for a panel to determine whether a merger with a foreign entity can be justified on national security grounds,” Patel said.

Patel said one example of an instance where a merger or acquisition’s impact on national security would be pertinent would be in a hypothetical case where a foreign arms manufacturer merges with or acquires a local one.

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