Should Competition Commission pay costs?
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.