Should Com­pe­ti­tion Com­mis­sion pay costs?

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - NICK ALTINI

THERE is a greater aware­ness of com­pe­ti­tion law and the need to com­ply in cor­po­rate SA to­day than there was even five years ago. Firms have changed their at­ti­tude to­wards com­pe­ti­tion law by no longer see­ing an­ti­com­pet­i­tive be­hav­iour as some­thing that is “tech­ni­cally wrong but ev­ery­one does it so no real harm done” to ac­cept­ing that some forms of an­ti­com­pet­i­tive be­hav­iour, such as col­lu­sion, are morally rep­re­hen­si­ble and have no place in eth­i­cal firms.

There has been em­pha­sis in the cor­po­rate sec­tor on im­ple­ment­ing com­pli­ance pro­grammes, train­ing staff and tak­ing a risk-averse at­ti­tude to com­pe­ti­tion law. For some time, how­ever, there has been ten­sion in a num­ber of mat­ters taken up by the Com­pe­ti­tion Com­mis­sion where the firm un­der in­ves­ti­ga­tion ques­tions the va­lid­ity of the in­ves­ti­ga­tion or the ju­ris­dic­tion of the com­mis­sion to con­duct the in­ves­ti­ga­tion in the ab­sence of a rea­son­able sus­pi­cion of pro­hib­ited con­duct.

This arises from a mat­ter in the dairy in­dus­try, where the Supreme Court of Ap­peal held that the com­mis­sion can­not just in­ves­ti­gate an in­dus­try where it sus­pects there may be a mar­ket fail­ure or lack of com­pe­ti­tion — it can only do so where there is a rea­son­able sus­pi­cion of wrong­do­ing.

The mar­ket in­quiry pro­vi­sions in the amend­ment act will al­low the com­mis­sion to in­ves­ti­gate an in­dus­try where there is a ba­sis to be­lieve that there are not op­ti­mal lev­els of com­pe­ti­tion, but with­out be­ing con­strained by the pre­req­ui­site of hav­ing a sus­pi­cion of an of­fence.

There are sec­tors that lend them- selves to mar­ket in­quiries. The pro­posed mar­ket in­quiry into the pri­vate health­care sec­tor should be in­ter­est­ing from a prece­dent per­spec­tive and the com­mis­sion will plan and ex­e­cute this care­fully. We want to see a process that is open, fair and ef­fi­cient. At the end of the process there must be a clear in­di­ca­tion of find­ings and what ac­tions the com­mis­sion plans to take next and what is ex­pected of mar­ket stake­hold­ers as an out­come of the process.

Th­ese fac­tors will act as a bea­con of guid­ance for other sec­tors that could be the sub­ject of fu­ture mar­ket in­quiries.

Reg­u­la­tors are crea­tures of statute — they can only act within the man­date of the statute that en­ables them and can­not ride rough-shod over the rights of the par­ties un­der their ju­ris­dic­tion, par­tic­u­larly be­fore there has even been a find­ing by a com­pe­tent court or tri- bunal of ac­tual wrong­do­ing. At the same time, it be­hoves firms un­der in­ves­ti­ga­tion (and their ad­vis­ers) to co­op­er­ate, as a mat­ter of good gov­er­nance, with reg­u­la­tors who are le­git­i­mately ex­er­cis­ing their pow­ers.

The Com­pe­ti­tion Tri­bunal has done a ster­ling job, and while I don’t al­ways agree with its find­ings: that’s the na­ture of le­gal de­bate. There are al­ways two points of view and that is also why there is an ap­peal process so that con­tentious is­sues can be tested ex­haus­tively.

The Com­pe­ti­tion Com­mis­sion has also gone from strength to strength. If I could change one thing, it would be to amend the leg­is­la­tion to al­low the tri­bunal to make cost or­ders against the com­mis­sion in ap­pro­pri­ate cir­cum­stances. I don’t mean that the com­mis­sion should al­ways pay costs if it loses a mat­ter — there are im­por­tant pol­icy rea­sons not to im­pose that kind of risk on the com­mis­sion — but I do think that an ab­sence of risk for the com­mis­sion does, on oc­ca­sion, lead to oner­ous out­comes for firms un­der in­ves­ti­ga­tion and the pos­si­bil­ity of pay­ing costs would be an in­cen­tive for the com­mis­sion to sharpen its pen­cil.

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