Pres­sure is on to ad­mit to col­lu­sion

Com­pe­ti­tion Com­mis­sion’s le­niency pol­icy has proved ef­fec­tive

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - HEATHER IRVINE & BUR­TON PHILLIPS

LE­NIENCY poli­cies al­low a car­tel mem­ber to se­cure im­mu­nity from prose­cu­tion, or sig­nif­i­cantly re­duced fines, if they come for­ward and con­fess col­lu­sion to the com­pe­ti­tion au­thor­ity. By sig­nif­i­cantly in­cen­tivis­ing com­pa­nies to come for­ward and re­port con­tra­ven­tions of com­pe­ti­tion law such as price-fix­ing, mar­ket divi­sion and bidrig­ging, these poli­cies im­prove the ef­fec­tive­ness of com­pe­ti­tion reg­u­la­tion and re­duce the cost of en­force­ment.

SA led the way by in­tro­duc­ing a le­niency pol­icy in 2004. It has proven to be a highly ef­fec­tive weapon in the ar­se­nal of the Com­pe­ti­tion Com­mis­sion: to date, fines of more than R3bn have been im­posed in cases in­volv­ing le­niency ap­pli­ca­tions. This in­cludes fines paid by car­tels in the ce­ment, bread, grain and tyre in­dus­tries. Penal­ties were paid by con­struc­tion firms as part of an in­no­va­tive fast-track le­niency and set­tle­ment process re­lat­ing to price-fix­ing and mar­ket al­lo­ca­tion ahead of the 2010 Soc­cer World Cup. Nine South African con­struc­tion firms were granted im­mu­nity from prose­cu­tion for 26 in­stances of price-fix­ing, mar­ket al­lo­ca­tion and col­lu­sive ten­der­ing but had to pay fines of more than R1.4bn in to­tal. This con­sti­tutes al­most half the to­tal rand value of fines im­posed by the Com­pe­ti­tion Tri­bunal since in­cep­tion of the South African com­pe­ti­tion leg­is­la­tion in 1999.

In Mau­ri­tius, the Com­pe­ti­tion Com­mis­sion re­cently rec­om­mended the im­po­si­tion of sub­stan­tial fi­nan­cial penal­ties on two bev­er­age com­pa­nies pur­suant to the first ap­pli­ca­tion for le­niency since the in­cep­tion of the au­thor­ity in 2009. Phoenix Bev­er­ages ap­plied for le­niency in re­la­tion to the agree­ment it con­cluded with Stag Bev­er­ages, in which they agreed that Stag would exit the Mau­ri­tian beer mar­ket and Phoenix Bev­er­ages would not sell beer in Mada­gas­car. The com­mis­sion rec­om­mended fi­nan­cial penal­ties of 20-mil­lion Mau­ri­tian ru­pees (R7m) and 6-mil­lion ru­pees (R2.3m) be im­posed on Phoenix Bev­er­ages and Stag Bev­er­ages re­spec­tively.

Other African com­pe­ti­tion au­thor­i­ties look set to in­tro­duce cor­po­rate le­niency poli­cies soon. The Namib­ian com­pe­ti­tion au­thor­ity adopted a draft le­niency pol­icy in March 2012 and it is cur­rently un­der re­view by the trade and in­dus­try min­is­ter. The Com­pe­ti­tion Au­thor­ity of Botswana pre­pared a draft pol­icy in 2013, but it has not yet been for­mally adopted. In Zam­bia, the Com­pe­ti­tion and Con­sumer Pro­tec­tion Com­mis­sion is work­ing with the min­istry of jus­tice and their prose­cu­tion au­thor­ity to im­ple­ment a pol­icy for grant­ing im­mu­nity from crim­i­nal prose­cu­tion to in­di­vid­u­als and com­pa­nies en­gaged in car­tel ac­tiv­ity in ex­change for in­for­ma­tion. The Tan­za­nia Fair Com­pe­ti­tion Com­mis­sion is sim­i­larly fi­nal­is­ing its pol­icy, which will re­quire an amend­ment of the Com­pe­ti­tion Act be­fore it can come into ef­fect.

As more com­pe­ti­tion au­thor­i­ties in Africa adopt le­niency poli­cies, the pres­sure on car­tel mem­bers to come for­ward and re­port col­lu­sive agree­ments will in­ten­sify. The risk of prose­cu­tion for con­tra­ven­tions of com­pe­ti­tion law is ris­ing. Com­pa­nies op­er­at­ing in Africa need to as­sess the ex­tent to which they are com­pli­ant with dif­fer­ent com­pe­ti­tion laws in var­i­ous ju­ris­dic­tions, and to im­ple­ment com­pre­hen­sive com­pe­ti­tion law train­ing pro­grammes. This will place them in a po­si­tion to avoid con­tra­ven­ing com­pe­ti­tion law, as well as to iden­tify if there is an op­por­tu­nity to avoid huge fines by ap­ply­ing for cor­po­rate le­niency. Com­pa­nies need to con­sider the co-or­di­na­tion of le­niency ap­pli­ca­tions to var­i­ous African com- pe­ti­tion au­thor­i­ties, as well as the im­pact of these ap­pli­ca­tions on both fol­low-on dam­ages claims and the po­ten­tial for crim­i­nal li­a­bil­ity for the com­pa­nies and in­di­vid­u­als in­volved. Ad­vice from ex­ter­nal com­pe­ti­tion law coun­sel should be sought at an early stage of any car­tel in­ves­ti­ga­tion to en­sure le­gal priv­i­lege is main­tained.

Pic­ture: THINKSTOCK

’FESS UP AND GET A PASS

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.