Competition Amendment Bill, 2008 AMENDMENTS TO THE COMPETITION AMENDMENT BILL DATE: 7 October 2008 Zodwa Ntuli – DDG: Consumer and Corporate Regulation Division (CCRD) Nomfundo Maseti – D: Competition & Consumer Policy & Law (CCRD)

2 Purpose The purpose of this presentation is to present amendments to the Competition Amendment Bill (31B ) for consideration and approval

3 Introduction  The Competition Amendment Bill (“the Bill”) was introduced to the Portfolio Committee in June 2008;  The Committee held public hearings on 29 – 30 July 2008; the dti responded to issues raised during public hearings;  The committee deliberated on the Bill and adopted it on 8 August 2008;  The Bill was debated and adopted by the National Assembly on 21 August 2008;  The Select Committee on Economic and Foreign Affairs debated and adopted the Bill in August, subject to certain amendments.  On 25 September, the NCOP approved the Bill with amendments proposed by the Select Committee.

4 Amendments Summary of amendments 1.Application of the Act – error in referring to laws with concurrent jurisdiction 2.Complex Monopoly - insertion of the definition of conscious parallel conduct 3.Personal liability – deletion of phrase on reverse onus 4.Personal liability – remove phrase relating to ‘negligence standard’ 5.Market inquiry – remove ‘National Assembly’ and replace with ‘Parliament’ 6.Technical changes relating numbering, omissions and typographical errors.

5 Application of the Act Concern Clause 3 Incorrect reference to both “these Acts” creates confusion, as the intention is to refer to the Competition Act and any other sector legislation. Amendment The section is amended by omitting “these Acts” and insert “this Act and any other legislation”. This recognises any industry or sector legislation with jurisdiction on competition matters as the Competition Act.

6 Complex Monopoly Concern Clause 4  The Bill does not provide the meaning of “conscious parallel conduct” contained in the complex monopoly provisions  Business would not know what pricing strategies or practices are permissible and not permissible  Proposal – define ‘conscious parallel conduct’  Proper reference to the term e.g. conscious parallel instead of parallel conscious conduct Amendment  The dti inserted a definition of conscious parallel conduct in order to provide certainty to courts, lawyers and business on its meaning.  ‘Parallel conscious’ conduct was substituted with ‘conscious parallel’ conduct for correct reference.  Other changes relate to numbering

7 Market Inquiry Concern Clause 5 Inconsistency in Section 21(3) of the Competition Act as it requires the Minister to submit a market inquiry report to the National Assembly, while later on requires the report to be submitted to Parliament. Proposal – to delete ‘National Assembly’ and replace with ‘Parliament’ as Parliament includes the National Council of Provinces. Amendment Reference to the National Assembly for the submission of the Market Inquiry report was removed. ‘Parliament’ was inserted instead.

8 Personal liability Concern Clause 12 It is unconstitutional to introduce a ‘negligence standard’ for criminal sanctions on cartel. Directors or officers of firms will be criminally liable for conduct they have no ‘actual knowledge’ of. Subsection 12(5) shifts the onus of proving involvement of the director or officer of the firm in a cartel activity. This may be in breach of presumption of innocence principle. The state must prove every element of the offence.

9 Amendment Subsection 12(2) which introduces ‘negligence’ standard as opposed to ‘gross negligence’ may raise a constitutional challenge. There are instances where negligence may be appropriate for criminal liability. This section also attempt to hold directors and senior executives criminally liable for lack of exercising due care even when they do not have actual knowledge of the cartel activity. The intention was to impose stringent measures and capture instances where directors would easily deny involvement or knowledge of such activity. On subsection 12(5), the phrase ‘in the absence of evidence to the contrary, and conclusive’ was replaced with ‘prima facie’

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