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Tougher crackdown on the cards from competition authorities - minister

Jul 18 2018 21:00
Khulekani Magubane

Cape Town – The Competition Amendment Bill will allow for first-time offenders in competition laws to be fined by regulators, Minister of Economic Development Ebrahim Patel has said.

Penalties will also be higher for repeat offenders.

Patel was speaking to reporters in Parliament on Tuesday, following his briefing of the portfolio committee on economic development about the amendments to the now 20-year-old Competition Act of 1998.

He said the Competition Amendment Bill kept the core functions of the original act, but included clearer definitions for competition offences, conditions of exemption from competition law, changes to penalties and a firmer resolve for economic inclusion.

He explained that, as opposed to the current act, the new bill would give competition regulators authority to make findings rather than merely compile reports. It would also allow for the tougher penalties for repeat offenders.

The Competition Commission in April told Parliament that it would be forced to lower its target for cartel investigations to be concluded in the 2018/17 financial year, because the competition watchdog was strained for funds.

Patel said to date, penalties for competition offences had stood at 10% of turnover, and the department had provisionally kept it at that level for first offences. Going forward, however, penalties would be increased to 25% for second offences by a business.

"We have taken the yellow card out of the referee’s pocket and chucked it away.

"If you are found guilty of an offence, you can only be found guilty if it is the second offence. It acts as an enormous deterrent to the Competition Commission prosecuting offences," said Patel.

Patel reiterated his commitment to giving competition authorities the capacity to continue and expand their work and inquiries into markets to ensure a more open, competitive and inclusive economy.

"We must keep on investing in our competition authorities. We are regarded as having leading competition authorities.

"They have their own challenges but they are regarded by their peers as having considerable capabilities," Patel said.

He said government would be careful not to trap companies in the quandary of "once an offender, always an offender", however, adding that competition authorities would examine each case on its own merits.

"If a second offence occurs a year after the first, I anticipate that the Competition Tribunal [will] weigh things up and assesses each situation. We want cooperation from large firms, holding companies and from investors to say that we want an open economy," Patel said.

Policy 'remains complicated'

Competition Tribunal chair Norman Manoim said while competition policy remained complicated for SA, the department and the tribunal remained committed to giving capacity to the function.

"Competition is part and parcel of industrial policy. Amendments don’t change the trade-offs made by the relevant bodies. Implementing the market inquiries will require more resources and the minister has committed to providing these," said Manoim.

Patel said the bill had been approved by Cabinet and was currently tabled for Parliament to assess.

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