Legislation by administration
Every few months, in an innocuous gazette notice, the Competition Commission announces a new market inquiry into an industry in which it claims there might be factors that distort, restrict or impede competition. On the other side of these notices is an industry about to be investigated and made to spend millions explaining its business practices.
The latest announcement of a market inquiry into the poultry industry left Chris Schutte, the CEO of SA’s biggest chicken producer, Astral, “flabbergasted”.
The poultry industry has been loss-making or recording marginal profits. Yet, despite the pressures of load-shedding and water-shedding, it ensured there were no chicken shortages during the bird flu outbreak by importing eggs at great cost. Now, it must shell out more money to explain itself in an inquiry.
Taxpayers, too, foot the bill. Inquiries likely contributed to the legal fees of the commission, which rose 37% to R80m in 2023. Consultants added R16m last year, up from R11m previously.
Since 2019, the commission has the ability to make binding recommendations on any industry hauled before it. The question some lawyers now ask is whether the commission is usurping the role of parliament by regulating industries through inquiries.
In terms of the constitution, law making is the prerogative of parliament. However, a handful of economists and lawyers at the commission now have the power to tell any industry they choose to investigate how to do business. That is without having to prove firms have a monopoly or broke the law by abusing their dominance — a previous bar for serious intervention — the commission can now hold an inquiry on suspicion of competition issues.
The commission instructed a group of estate agents to sell their stake in the privateproperty.com website after the online platforms inquiry, the first with binding powers.
In the same inquiry it told Google how to label sponsored content and forced it to give away advertising to small players. It also told Apple how to display SA apps on its app store and directed Takealot to split divisions.
At least two firms are appealing the findings of the online intermediation platforms inquiry. They could suggest that the commission is regulating sectors of the economy by proxy.
Surely, it cannot be left to administrators to dictate how varied industries should run and who can own what?
The commission is investigating the ailing steel sector, the ailing newspaper and online media sector, fruit and vegetable suppliers and now the poultry industry. Most of these industries can ill afford witch-hunts.
Market inquiries are not about breaking up a monopoly or ensuring competition, which is great for consumers. They appear to be about extracting concessions for small business from big business — even if it is loss-making.
Anyone interested in democracy should be concerned at the poultry inquiry. An unelected administrative body has gathered enormous power to make rules for large parts of the economy.