COMMISSIONER FEARS LEGAL ‘OVERKILL’
The long-awaited amendments to the Competition Act may lead to legislative “overkill”, according to competition commissioner Thembinkosi Bonakele. “The more I hear politicians talk about this, [the more] I am not sure if we know what to expect. I hope it is not going to be something similar to the criminalisation,” he said at the launch of a new book of essays, Competition Law and Economic Regulation, focused on southern Africa.
Bonakele has been critical of the previous major change to the Competition Act – the introduction of criminal liability for company bosses who participate in cartels.
The fear is that it will be practically unenforceable by the National Prosecuting Authority.
Now the prospect of new provisions to tackle economic concentration raises similar concerns. “There is a lot of talk in South Africa now about what to do with the problem of concentration,” Bonakele said.
“I am one of those who have quietly encouraged the minister to really look at this and make things a little easier for the Competition Commission,” he said.
President Jacob Zuma promised a new amendment in his state of the nation address this year.
In May, Economic Development Minister Ebrahim Patel appointed an expert panel to design “radical interventions” through competition law.
People close to the process cite two probable outcomes: more teeth for the commission’s existing market inquiry mechanism and a simpler burden of proof for abuse of dominance cases.
As things stand, a market inquiry by the commission leads to recommendations that get considered by Parliament and government departments.
The mooted idea with the expected amendments is to make the recommendations enforceable. The problem is that this will probably see the commission bogged down in court, facing a wave of review applications when it uses these powers, said one source.
It is probably not the law itself that inhibits progressive outcomes, but the conservative attitude of the Competition Appeal Court and Constitutional Court, Bonakele suggested.
“I now begin to wonder if it is a problem of legislation or a problem of South African political economy – or ideology. I suspect we may create an overkill legislation.
“Looking at our judgments is probably much more important than legislative changes,” he said.
The Competition Appeals Court has tended to strike down rulings from the Competition Tribunal, while in most cases the Constitutional Court has not given consideration to appeals from the Competition Appeals Court.
“I think there is a very real fear of intervening in the markets. In Europe you see an interesting contrast in the appetite of the highest court to take on economic questions. “I find the South African establishment is very conservative, much closer to the US and further away from what I consider to be quite a progressive idea about governance and the economy that you find in Europe.
“I hope judges read the book because I think it contains very interesting critiques of how we have progressed thus far,” said Bonakele. One of the essays in the book is a critique of an important Competition Appeals Court ruling on overpricing from 2015.
The ruling cleared Sasol of a tribunal finding that it abused its dominance to charge excessive mark-ups of up to 43% for plastic feedstock used by local manufacturers.
Authors Reena das Nair and Pamela Mondliwa from the University of Johannesburg argue that the Competition Appeals Court took a “clearly wrong” theoretical approach in acquitting Sasol. This involved choosing a basis for imagining what a hypothetical competitive market would look like that almost automatically “defines away” the problem of excessive pricing in sectors such as South Africa’s petrochemical sector where an unassailable monopoly was built on state support.
– Dewald van Rensburg
Competition commissioner Thembinkosi Bonakele