Competition Act draft amendment Bill to address inequalities

Saturday, December 2, 2017

Economic Development Minister Ebrahim Patel has called for inputs on the Competition Act’s draft amendment Bill which seeks to address issues of economic concentration and the racially-skewed spread of ownership in the economy.

"We are releasing the Bill in order to obtain the views and advice of the public. I hope small firms as well as larger companies and trade unions and other civil society institutions make representations so that we have the benefit of their views before finalising a package of proposals for consideration by Parliament," said Minister Patel.

The Act’s mandate is to level the playing field of stakeholders to participate fairly in the economy. It also regulates the transfer of economic ownership in line with the public interest.

The most significant amendments are to:

- Enhance the market inquiry process to empower the Competition Commission to consider features of markets, including high levels of concentration and limited economic transformation and take any remedial action that is reasonable and practicable to address such features of a market that prevent, restrict or distort competition;

- Expand the consideration of cross-shareholdings, cross-directorships and the phenomenon of creeping concentration in merger control proceedings;

- Ensure scrutiny of the impact of mergers on the spread of ownership in the economy as a public interest issue;

- Require dominant firms to justify their conduct when they are accused of anti-competitive abusive practices and improve the prospects of prosecuting dominant firms for excessive or predatory pricing;

- Enable the Commission to research and report on the impact of merger conditions and behavioural or structural remedies so that all stakeholders are informed about how the competition regime achieves the purposes of the Act; and

- Streamline and enhance various procedures governing the work of the competition authorities and the involvement of the Minister in competition matters.

Many markets in the South African economy are faced with economic concentration.

In a number of sectors, only a handful of firms own the space which results in heightened barriers to entry.  This concentration may be economically unjustified and requires redress.

In addition, many parts of the economy are still faced with racially-skewed ownership profiles. The exclusion of most historically disadvantaged South Africans from the ability and opportunity to own productive assets must be remedied to unlock the competitive and development benefits of full participation by all in the economy.

"The effect of these structural features of the local market is to stunt economic growth, prevent entry of new players, reduce consumer choice, limit the levels of innovation and dynamism in the economy, and feed a growing resentment among black South Africans of the failure to realise the promises made by the Competition Act”

“In light of these challenges, the amendments proposed seek to address the concerns within a framework that can promote faster and more inclusive growth," said the Minister.

The Bill also deals with various institutional and procedural processes that aim to boost the efficiency and effectiveness of the competition authorities.

Cabinet approved the Bill for public consultation and comment which is to be completed by February 2018. Inputs received, will then be considered before a final Bill is approved by Cabinet for presentation and submission to Parliament for consideration, debate and adoption.

The period for public comment is the next 60 calendar days. Government will also engage with parties in this period. –

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