Towards a fair and efficient economy for all The Competition Amendment Act, 2009 Presentation to Parliament’s Portfolio Committee on Economic Development Commissioner Shan Ramburuth 4 May 2010

Background Towards a fair and efficient economy for all 2 Policy review initiated by the dti in 2006 Public outcry against anticompetitive practices eg. bread cartel Government’s commitment to strengthening the competition authorities Competition Amendment Act assented to on 28 August 2009 Not yet in force. Date to be fixed by the President by proclamation in the Gazette

Key timelines Towards a fair and efficient economy for all 3 Salient stepsDate DTI competition policy review document finalised30 June 2007 Competition Amendment Bill introduced to parliament4 June 2008 First Portfolio Committee report on the Bill14 August 2008 Second consideration of the report by the Portfolio Committee21 August 2008 Select committee report for consideration by the NCOP1 September 2008 NCOP consideration of the report25 September 2008 Second round consideration of the report21 October 2008 National Assembly approval21 October 2008 Sent to President for assentDate unknown President returned the Bill to parliament citing constitutional issues from reverse onus 27 January 2009 National Assembly moved to have the Bill passed without amendments, notwithstanding the President’s reservations on constitutionality 18 February 2009 Bill re-sent to the PresidentDate unknown President assented to the Bill28 August 2009 Promulgated into lawNot yet announced

Key amendments Towards a fair and efficient economy for all 4 Complex monopolies Criminalization of cartel conduct Corporate leniency policy Market enquiries Jurisdiction in markets subject to sector specific regulations

Complex monopolies Towards a fair and efficient economy for all 5 Opportunity to investigate concentrated sectors where specific anti- competitive conduct is not clearly discernible Investigation of concentrated markets prone to conscious parallel conduct:  75% of the goods / services supplied to, or by, five or fewer firms;  any two or more of these firms conduct business in a conscious parallel or co- ordinated manner, without agreement; and  such conduct has the effect of substantially preventing or lessening competition in that market Commission may apply to Tribunal for declaratory order against two or more firms, if and only if:  one of the firms involved has at least 20% of the relevant market; and  the complex monopoly has resulted to high entry barriers, exclusion of other firms, excessive pricing, refusal to supply goods or services, or other market characteristics that indicate coordinated conduct. Firms may raise pro-competitive, efficiency and technological defences

Criminalization of cartel conduct Towards a fair and efficient economy for all Targets the director of a firm or a person with management authority who caused or knowingly acquiesced to the firm’s collusive conduct Liable for a fine not exceeding R and/or 10 yrs imprisonment A firm may not pay the fine on behalf of an individual The NPA will be responsible for criminal prosecution Role of Commission:  Commission may certify person as deserving of leniency  Commission may not seek or request prosecution of person certified as deserving of leniency  Commission may make submission to NPA in support of leniency of person certified as deserving of leniency Criminal prosecution can only proceed if the firm has acknowledged cartel conduct or the courts have made a finding of cartel conduct 6

Market enquiries Towards a fair and efficient economy for all 7 Amendment provides Commission may use investigative powers to inquire into markets if it has reason to believe that competition is prevented, restricted or distorted The Minister can request a formal market inquiry Upon completion of enquiry, Commission  must submit a report to the Minister with/without recommendations  may initiate a complaint  may refer complaint to the Competition Tribunal for adjudication

Concurrent jurisdiction Towards a fair and efficient economy for all 8 Amendment clarifies concurrent jurisdiction between the competition authorities and other sector regulators Gives primary authority to competition authorities to investigate anti- competitive conduct Inconsistencies between the Electronic Communications Act and Competition Act ECA assumed full jurisdiction over the electronic communications sector Offending clause since been amended to confirm jurisdiction of the Competition Act Addresses forum shopping

Challenges of the Amendment Act Towards a fair and efficient economy for all Legal challenges on constitutional grounds Co-ordination with the NPA Technical economic and sector expertise required Drafting of regulations to be finalised Resource constraints 9

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