Competition Crackdown

It is claimed that Competition Legislation is about protecting consumers and promoting greater access and participation of new entrants into the economy.  Economies where there is a fair level of market attestability will receive more investment.

It is often claimed that South Africa boasts a modern industrial economy, sophisticated and complex but, when compared with similar economies, has a long way to go.  It may only now be coming of age.

It is claimed that due to the high levels of concentration of capacity in certain sectors of the economy, together with tight oligopolies – a small number of large enterprises that collectively exert control over supply and a market – provided fertile conditions for anticompetitive conduct.

Government is bidding to break the stranglehold of cartels in line with international trends.  In 1998 a new Competition Act was passed and promulgated which is changing the landscape.  The Competition Commission which was a creation of the Act initially concentrated on merger control but in recent years have started focusing on anticompetitive behaviour such as cartels. It, however, has a long way to go before it can catch-up with some first world economies.  In the United States of America they have had a competition regime for 120 years and in Europe for 60 years.  The Competition is now moving on to more technical and complicated investigations attempting to prove abuse of market dominance which requires sophisticated levels of economic analysis.

Much of the Competition Commissions recent achievements have been the result of its corporate leniency policy where enterprises can seek lower fines or immunity in exchange for disclosing anticompetitive activities.  In this manner a number of high profile cartels in respect of pipes, steel and wire were recently exposed in the supply side of the Construction Sector and there have been suggestions that they Competition Commission has been approached by two contracting enterprises for leniency.

Britain’s consumer watchdog recently imposed fines amounting to £129.5 on 103 construction firms for colluding in bids for projects such as hospitals, schools and housing refurbishments. 

The enterprises included top British Contractors Balfour Beatty, Carillion, Connaught, Interserve, Keiv and Galliford Try.

The office of Fair Trading announced that one of its largest investigations found practices that distorted the process on 199 tenders worth more than £200 million from 2000 to 2006 across England in both the public and private sectors.

In South Africa an important amendment to the Competition Act was signed into law in early September 2009.  Certain anticompetitive activities have now been criminalized.  If a company, for example, has been found guilty, every Director is assumed to be guilty and will have to seek recourse in Courts to prove their innocence.

It has become a case of “not” but “when” this is applied.

Pieter Rautenbach | Projects Facilitator